Opinion | China’s one-child policy casts a long shadow over its economy, society and relations with the world

Name: China faces demographic challenge as birth rate drops despite government efforts
Uploaded: 2020-12-12T00:15:14.000Z
Duration: 1 min 31 s
Description: China faces demographic challenge as birth rate drops despite government efforts

More effective than realised, the one-child policy put the brakes on China’s economic growth, created a state pension time bomb, and forced Beijing to export excess capacity, reshaping the global economy

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Yi Fuxian

Published: 8:15am, 12 Dec 2020Updated: 8:33am, 12 Dec 2020

China has replaced its one-child policy with the two-child policy, and is expected to abolish population control soon. However, the impact of the one-child policy on China’s economy, society, politics and national mentality will last for a long time.

If China’s economy is compared to a plane, the 1979 policy of reform and opening up ignited the fuel – the young workers – that drove the economy to take off and fly at high speeds for four decades.

But the one-child policy cut off this economic fuel, shrinking the prime-aged labour force of 18-59-year-olds from 2012, which in turn slowed gross domestic product growth from 10 per cent in 2011 to 6 per cent in 2019.

China’s demographic structure in 2035 will be similar to that of Japan’s in 2018, which means China’s economic growth will continue to decline. Flying at a high speed without enough fuel is dangerous for both China and the world. Unfortunately, the pilots have yet to fully realise this, because statistics officials and demographers have exaggerated the population data.

In northeastern China – Heilongjiang, Liaoning and Jilin provinces – where the fertility rate has fallen sharply below the national average, the economic engine has stalled. Despite official boasts of 5 per cent annual GDP growth, the fourth national economic census showed that the region’s GDP in 2019 was the same size as in 2012 – meaning zero growth for seven years.

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China faces demographic challenge as birth rate drops despite government efforts

The one-child policy has reduced family size and needs, so China’s household consumption has been declining while the savings rate has risen. Much of these savings, in the absence of other investment options, has gone into property, which led to high housing prices. In 2018, China’s household consumption accounted for only 39 per cent of GDP, while in India and the United States, consumption accounted for 59 and 68 per cent of GDP respectively.