CHINA / Foreign Media on China
China's choice: Baby boom or bust
By Antoaneta Bezlova (LAtimes)
Updated: 2006-03-21 15:52
Fixated on maintaining the country's high-powered economic growth,
Chinese policymakers have been soliciting opinions from economists about
how to avoid future labor shortages by relaxing and even scrapping the
rigid one-child policy.
But the effort has generated a debate over a 25-year-old family-planning
policy that was once considered sacrosanct.
Population experts have clashed with economists about what path China - a
nation of 1.3 billion with scarce farmland and water supplies - should
take to maintain a healthy economic growth and delay the arrival of a
graying society without creating another population explosion.
China's one-child policy, which the government started implementing in
1979, is widely unpopular inside the country.
The government credits the policy for controlling growth of China's
already huge population and says it would have at least 300 million more
people today if it were not for the measure.
The government's confidence, however, has been dented by a series of
studies in recent years, and demographic evidence suggesting that because
of the low birth rates China is growing old too early and too fast.
Fears have risen that a rapid increase in aged people will put a strain
on the working-age population and slacken economic growth. As China's
baby-boomers born before 1979 start retiring, there will be fewer young
people of working age to take their places and fuel the country's
economic powerhouse.
"For 20 years China benefited from its 'demographic dividend', but now we
anticipate that around 2015, this dividend [will] turn into deficit,"
said Cai Fang from the Population and Labor Economic Research Institute
under the Chinese Academy of Social Sciences.
Cai's research credits the surge in the number of working-age people, or
what he calls the "demographic dividend", with contributing to 24% of the
economy's growth between 1978 and 1998. But Cai predicts China will see
the growth of its working-age population coming to a halt around 2013 and
might begin experiencing labor-force shortages.
"We are currently witnessing the transformation of China into an
unprecedented aging nation," Li Keping of the National Social Security
Fund Executive Council told a recent meeting on family-planning policy
where various population and economic experts gathered. "What is unique
about China's case is that the aging process is happening before the
country has grown rich, and it is happening too fast."
Chinese economic planners estimate the country will reach its well-off
threshold, or what in Chinese is termed xiaokang (comfortable living), in
2020. But a national census conducted in 2000 concluded that China had
already crossed into the phase of a rapidly graying nation.
In 2000, people aged 60 or older composed 10% of the population and their
numbers were growing by 3% a year. The demographic state of China that
year fit nicely with the United Nations definition of an aging society -
a country or a region where people aged 60 or older make up 10% of the
overall population.
What is more, the numbers in China are rising fast. Chinese demographers
predict that if current population trends persist, by 2035 people aged 65
and older will make up 20% of the population.
China's national wealth, however, will not be a match to shoulder the
burden of a rapidly graying nation. In 2030, China's annual per capita
income will be about US$11,000 measured in current prices, according to a
study by Goldman Sachs Group in Hong Kong. This would compare with almost
$36,000 of annual per capita income last year in Japan - another rapidly
aging Asian society.
With fewer workers supporting growing numbers of elderly, the strain on
the severely underfunded social pension system is expected to grow. The
pension system currently only covers urban Chinese, not rural dwellers
who make up the majority of the population.
Even so, the World Bank estimates that only 160 million urban people, or
less than 15% of China's working-age population at the moment, are
covered by the social-security net.
Feeling insecure about their retirement age, Chinese people are saving at
rates that economists fear might in the future starve the economy of
investment and consumption spending. From 1990 until 2001, the World Bank
says, China ranked No 1 in the world in terms of family savings.
But while economists and population experts agree that a rigid
implementation of the one-child policy is becoming economically
counterproductive, they seem to differ on what to do about it.
The economic lobby, led by prominent economists such as Lin Yifu and Hu
Angang, insist the policy should be steadily and substantially relaxed to
ease labor shortages.
"If not, then China, one of whose economic advantages is labor-intensive
industries, is bound to lose because of the lack of workers," Lin, a
professor of economics at Peking University, told the meeting on
family-planning policy held at the same university.
Hu, a researcher on economic policies at Thsinghua University, warned
that if the current one-child rule remains in place, then by 2050 India
will have 200 million more people of working age than China, positioning
the latter at a disadvantage with one of its major economic competitors.
But population experts counter that the one-child policy is no longer as
harsh as it used to be. In fact, they say, about 30% of the population
currently are allowed to have two children.
Many rural couples may have a second child, especially if their first is
a girl; in the cities a husband and wife who each are the products of
single-children families also may have two children.
Some demographers have even accused the economic view of China's
population trends as being shortsighted, given the country's lack of land
and water resources.
"Economists only consider the developments over the next 20 or 30 years,"
Renmin University population expert Wu Cangping said. "But demographers
have to take a longer view and think about the next two or three
generations. If we allow the birth rates to go up now, then 60 years from
now we would be faced with another baby boom."
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