China Three-Child Policy Aims To Rejuvenate Aging Population

Beijing says married couples may have three children, up from two, after a recent census showed a rise in the percentage of Chinese aged 60 and above. China Three-Child Policy Aims To Rejuvenate Aging Population

China said Monday that it would allow all married couples to have as many as three children and provide government support for education and child rearing, a move that comes as Beijing struggles to reverse a worsening demographic situation that presents a host of social and economic challenges.

The shift comes more than five years after Beijing ended its decadeslong “one-child policy” to let all couples have two children, and follows the May 11 release of census figures showing China’s population on the cusp of a historic turning point after years of rapid growth.

The announcement came after a Monday meeting of the Politburo, the Chinese Communist Party’s top decision-making body, chaired by leader Xi Jinping —a signal of concern over the demographic situation at the country’s highest levels. State-run Xinhua News Agency said the change would “improve the country’s population structure, actively implement the national strategy to respond to the aging population, and maintain the country’s demographic advantage.”

Traditionally, such decisions have come out of broader Communist Party policy conferences. Some demographers had expected a loosening or even a lifting of birth policies at the end of the year at a roughly annual gathering of the top few hundred party officials.

“It’s unprecedented,” said Yi Fuxian, a U.S.-based researcher and longtime critic of China’s population policies. “It signals how concerned Xi Jinping is.”

Mr. Yi said that by itself, the move won’t change the broader trends. More than merely lifting the cap on the number of children that families can have, though, Monday’s announcement sets the stage for a host of potentially sweeping changes on healthcare, retirement, pensions and social welfare.

Under the new policy, the government said it would offer more equitable educational resources and reduce educational expenditures for families—policies aimed at removing obstacles widely seen by experts as holding back couples from having more children.

The question now is whether the Chinese government’s relaxing of birth restrictions will make a difference in persuading more of the country’s couples to have more babies.

In 2013, the government allowed couples to have two children when one of the parents was an only child, and in 2015, Beijing said it would allow all couples to have up to two children.

About half of Chinese couples are willing to have two children, according to a 2017 study by the state-backed All-China Women’s Federation.

The once-in-a-decade census showed 12 million babies born in China last year, the fourth straight year in which births fell, despite the relaxed restrictions. In 2016, there were 17.86 million births.

The census also showed a sharp rise in the percentage of Chinese aged 60 and above, to 18.7% of the population as of the end of 2020, up from 13.3% in 2010. The portion of Chinese citizens aged between 15 and 59, representing the size of its working population, stood at 63.35% in 2020, down from 70.1% in 2010.

“Evidence in other countries suggests that, once [the] birthrate is on a downward trend, it is difficult to…reverse it,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

In Hong Kong, Taiwan, Singapore, South Korea and Japan, years of government efforts to reverse falling birthrates have largely failed. But the scale of China’s challenge is on a different order.

For more than three decades, China relied on young workers to fuel its economic growth and build up the world’s second-largest economy. Now, the impact of the one-child policy—imposed by Beijing in 1980—is becoming apparent, having effectively prevented the births of millions of workers and women of childbearing age, as the number of senior citizens is climbing.

China Moves To Three-Child Policy To Boost Falling Birthrate

China will allow all couples to have a third child, a surprise move aimed at slowing the nation’s declining birthrate as risks to the economy’s long-term prospects mount because of a rapidly aging population.

In a meeting presided over by President Xi Jinping Monday, the Communist Party’s Politburo decided to ease the current two-child restriction, saying “allowing every couple to have three children and implementing related support policies will help improve the population’s structure,” according to a report by the official Xinhua News Agency.

It wasn’t clear when the move would take effect, although the meeting discussed major policy measures to be implemented in the period to 2025.

China has been gradually reforming its stringent birth policy that for decades limited most families to only having a single child, with a second child allowed since 2016. However, that reform did little to reverse the declining birthrate and further relaxation of the limits is unlikely to lead to a sustained increase.

Some government officials, including researchers at China’s central bank, have called for birth limits to be abolished entirely. The debate was intensified after the results of China’s latest national census earlier this month showing a decline in the country’s working-age population over the last decade.

The Politburo also announced the government “will prudently lift the retirement age in a phased manner,” according to the Xinhua report. China has one of the world’s lowest official retirement ages, and the Communist Party announced plans to reform the system last year.

The declining birthrate means China’s population, currently at 1.41 billion, may begin to shrink before 2025, according to Bloomberg Economics estimates. There were 12 million new babies born last year amid the uncertainties of the coronavirus pandemic, the lowest number since 1961.

“The Politburo probably saw the latest census results and with all the public consensus about a change, it’s easier now to make a decision,” said Henry Wang, president of the Center for China and Globalization, which has former government officials on its advisory board and describes itself as “China’s leading global non-governmental think tank.”

“They probably need some time before they completely drop” the birth restrictions, he said. “If this adjustment doesn’t help, then that would help them make a future decision,” he added.

The policy change was quickly mocked on Chinese social media, with many people lamenting the fact that couples from single-child households would now have to raise three children while supporting four elderly parents and repay heavy mortgage debt. It also triggered concerns over women’s employment, with some saying that it will become even harder for females to get a job as companies are unlikely to be willing to shoulder the costs.

What Bloomberg Economics Says…

* China’s new three-child policy is a step in the right direction but it’s not enough to head off an inevitable demographic drag on the economy. Other steps, including birth- and parenting-friendly policies and an increase in the pension age, are needed as quickly as possible if China stands a chance of slowing a looming decline in its workforce and crunch from an aging population.

Eric Zhu, China Economist

The trend toward fewer births is likely to continue even with a looser birth policy, according to demographers. As in East Asia and Europe, preferences have shifted toward smaller families. A spike in births following the previous relaxation to allow most families to have two children was short-lived, with many parents citing the high costs of housing and education as a limiting factor.

“For those people who are rich, relaxing the policy will encourage them to have more children but for the common citizens, like the middle class or even the lower class, they don’t have enough incentive to make use of this new policy,” said Vivian Zhan, an associate professor of Chinese politics at the Chinese University of Hong Kong.

Fertility Patterns

Shares in Chinese companies related to infant care rose sharply following Beijing’s announcement. Milk formula maker Beingmate Co. Ltd. rose as much as 10% in Shenzhen, while fertility clinic service provider Jinxin Fertility Group Ltd. surged almost 24% in Hong Kong.

“We would not expect the policy change to make a major difference to the overall patterns of fertility in China, net of other changes to the environment of family building,” said Stuart Gietel-Basten, director of the Center for Aging Science at the Hong Kong University of Science and Technology, adding that the policy helped remove “a clear inconsistency in the narrative surrounding the concerns over low fertility with restrictions on births at the same time.”

China has maintained rapid economic growth in recent decades despite its slow population growth, with migration to cities propelling a shift from agriculture to factory and service work, which increased economic output per worker.

The current proportion of people living in urban areas of about 64% is roughly on par with the U.S. in 1950, suggesting potential for further catch-up. Delaying retirement would allow China to expand its workforce without increasing its birthrate.

Shrinking Workforce

But a lower birthrate will lead to a bigger elderly population. To maintain economic growth, Beijing will need to rapidly increase spending on pensions and health care while maintaining a high-level of corporate and state investment in order to upgrade its vast industrial sector and increase education levels, according to economists.

“A comprehensive policy package ranging from tax incentives, education and housing subsidies, more generous maternity leave, universal provision of child care” is needed for the three-child policy to be effective, said Liu Li-Gang, managing director and chief China economist at Citigroup Inc. The government will need to rebuild the social safety net, as well as contain housing prices and reduce education costs, he said.

The right mix of policies could mean China becomes the world’s largest economy, continuing to propel global demand for commodities in the coming decades, while its gray consumers become a vast market for multinationals, with a huge pool of pension savings targeted by global finance companies. A less effective response could mean China never overtakes the U.S. in terms of economic size, or does so only fleetingly.

China’s fertility rate began a steady decline from the 1970s, as education levels increased and the government encouraged rural women to have fewer children, culminating in the national “one child” policy which applied to most women from the end of that decade. The policy was often harshly enforced, especially in countryside areas where officials sometimes ordered women to have abortions.

The government is aiming to gradually raise the retirement age from the current level of 60 years for men and as low as 50 for women, and plans for 50 million people to move permanently from rural to urban areas in the next five years to take up service and manufacturing jobs with higher wages.

“The policy shows that China faces a serious problem of an aging population, shrinking labor force,” said Hao Zhou, senior emerging markets economist at Commerzbank AG. The decline of the labor force in coming years is set to be a drag on economic growth and contribute to higher inflation globally, as the cost of goods rise, he said.

Here’s What’s Needed To Boost China’s Falling Birth Rate

China’s decision to relax birth rules by allowing all families to have three children was met with skepticism from economists who doubt it’ll make much of a difference.

While the government promised a variety of support policies from developing a universal childcare service system to tax measures and improving maternity benefits, there were no details on when the three-child rule will take effect and these policies implemented.

Here Are Some Of The Key Steps Needed To Encourage More Births And Reverse The Shrinking Workforce:

Tax Breaks

A common reaction on social media to the announcement was that having a child was just too expensive, with the cost of childcare and education cited frequently.

China offered tax breaks to parents in 2019 to encourage them to have a second child, allowing them to deduct education fees and other costs from their personal income. Yet those measures likely won’t have a large impact on easing the childcare burden, especially when considering a third child, according to Zhao Wen, a researcher at the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences.

“Cash handouts and that sort of thing don’t usually have immediate effects in enhancing a country’s birth rate,” he said, adding that some local governments already have budget pressures, which means they won’t be able to be very generous.

It’s also unclear how many families actually want three children. Two children was seen as the ideal number by about 60% of respondents in a survey of more than 6,000 people by Fudan University in 2020. The average number of intended children was 1.59, well below the replacement rate.

Better Childcare

When considering whether or not to have another child, women of childbearing age are most concerned with their career development, the lack of childcare services for toddlers under three and the financial burden for the family, according to a 2016 survey by the former family planning administration and other government agencies.

The United Nations said in a 2019 report that “providing widely available, accessible, and high-quality childcare which starts immediately after parental leave finishes and whose opening hours are aligned with parents’ working hours is indispensable to sustaining higher fertility rates.”

However, the effect may be limited or take a while to appear. Japan made childcare free for children three years or older from late in 2019, but births still fell in 2020, as they did in many nations during the pandemic.

Workplace Discrimination

Tackling widespread gender discrimination at work is another way the government can encourage more women to have children. In a 2019 national survey, families cited the expected decline in womens’ salary after childbirth as one of the most important reasons for not having children, after the heavy financial burden and a lack of childcare, a National Health Commission official said in an interview with Xinhua News Agency Tuesday.

Retirement Age

The changes to birth policies are aimed at fixing the problem of China’s shrinking labor force. According to the census conducted last year, the share of the working population — those aged 15-to-59 — slumped to 63.4% in 2020 from more than 70% a decade prior.

The fastest way to boost the size of the workforce would be to raise the legal retirement ages in China.

These are currently among the lowest in the world at 60 years for men and as low as 50 for women and haven’t changed for decades, even as life expectancy has risen to nearly 77 years, according to the World Bank.

The average person retires before 55 now, and an extension of 3 years could add more than 60 million people to the country’s labor force, estimates Wang Tao, chief China economist at UBS AG. Other economists have suggested raising the age to 65 for both men and women, which would boost the workforce even more.

Japan, where the total population started shrinking in 2011, shows how successful this can be. The total labor force there continued to grow through early 2020, partly driven by people working past the official retirement age.

Single Mothers

One thing the government won’t do is stop controlling people’s fertility decisions. The government still bans families from having four or more children, even though that might assist in their goals and some government officials, including researchers at China’s central bank, have called for birth limits to be abolished entirely.

And there’s no sign it will extend various benefits to single mothers — the statement Monday is all about families and promoting marriage.

Updated: 6-18-2021

China Considers Lifting All Childbirth Restrictions By 2025

Concerned about falling birthrates, policy makers plan further shift toward policies that explicitly encourage childbirth.

Chinese officials are drawing up plans to further loosen birth restrictions and transition toward policies that explicitly encourage childbirth, according to people familiar with the matter, reflecting increased urgency in Beijing as economic growth slows and China’s population mix skews older.

Policy makers are discussing the possibility of fully doing away with birth restrictions by 2025, the end of the ruling Chinese Communist Party’s current five-year economic plan, according to one of the people. According to that person, China will likely begin by eliminating birth restrictions in provinces where the birthrate is the lowest before enacting nationwide changes.

The party said late last month that it would allow all couples to have as many as three children, weeks after a once-in-a-decade census showed China, the world’s most populous nation, on the cusp of a historic downturn in its population.

Last month, Chinese leader Xi Jinping told senior party officials that he regards China’s aging population as a threat to national security, calling on senior officials to address the challenge, according to the state-run Xinhua News Agency.

Any loosening of restrictions would likely be seen first in China’s economically depressed northeast, a region that the country’s health authorities hinted in February could take the lead in scrapping all remaining birth restrictions.

China’s three northeastern provinces, regarded as its rust belt, helped kick-start China’s industrialization in the 1950s but were badly hit by the country’s shift to a market economy in the 1990s and now have some of the lowest birthrates in the nation. The new census figures show the population in the northeastern provinces dropping by 1.2% over the past decade.

Some local governments in the region have taken the lead in adopting more aggressive policies in an effort to boost fertility rates. Heilongjiang province, which borders far-eastern Russia, said that couples in 18 of its cities could have a third child in 2016—five years before the same policy was introduced nationwide.

In neighboring Jilin province, government researchers argued in a February report that the province should draft plans to end all birth limits as soon as possible.

“Ending birth restrictions is not enough to reverse the trend of negative population growth in our province,” read the report, which was published by Jilin’s development and research center. “It is also necessary to introduce policies to encourage childbirth based on real-world conditions.”

Demographic and economic experts say aggressive moves are needed to slow China’s drop in births. The country’s population is expected to fall from the current 1.41 billion to roughly 730 million people by the end of this century, according to projections by an international team of scientists published last year in the British medical journal The Lancet.

While some experts say a smaller population wouldn’t be unwelcome, the structure of the population—without enough working-age people to support the swelling ranks of retirees—could weigh on China’s economy for decades, they warn.

Beijing has been reluctant to abandon birth controls altogether. One of the people familiar with the matter said leaders are worried that a total relaxation in birth restrictions could encourage poorer families in rural areas to have many more children and thus exacerbate economic conditions in parts of the country that the government had recently lifted out of extreme poverty.

Representatives for China’s cabinet didn’t immediately reply to requests for comment. The National Health Commission, which oversees demographic issues, also didn’t immediately reply for a request for comment.

Birth restrictions have been a key policy for China since 1980, when the leadership came to regard the country’s large and fast-growing population as an obstacle in building up a strong economy. Many families were compelled to pay fines for having more than one child, while others were subjected to forced sterilizations and abortions.

As the policy took root, it began to instill a mind-set among a generation of would-be parents that made them less willing to bear and raise children, experts say. That has helped push China’s birthrate to its lowest level in decades.

As the ramifications of the birth restrictions have become clear, the Communist Party has gradually loosened its birth restrictions. In 2013, it said that couples in which at least one partner was an only child could have two children without penalty.

It abandoned the one-child policy altogether in 2016, leading to a one-year increase in births. Demographers are pessimistic that last month’s loosening of rules to allow for three children will lead to a lasting shift.

Some experts, including one policy adviser to the Chinese government, have been calling for Beijing to totally eliminate birth restrictions as quickly as possible. The adviser expressed disappointment at Beijing’s decision to take the smaller step last month of allowing a third child. “What’s the point of waiting another few years to abolish all controls?” the person said, dismissing the three-child policy as a joke.

For other scholars, the situation is too drastic—and the moral implications too grave—for the government to continue trying to impose population controls on its people.

“The government needs to recognize reproductive rights as the basic right of its people. With birth control, no matter how many children people can have, Chinese still have no right to make decisions on reproduction,”said Mu Guangzong, a professor at Peking University’s Institute of Population Research in Beijing.

Updated: 8-8-2021

Why Xi Wants Cheaper Weddings For China

Facing a demographic crisis, officials want more people to tie the knot — but nothing fancy.

In Chongqing, one of China’s biggest cities, engaged couples will soon be eligible for a government-sponsored group wedding, according to a three-year “wedding-customs reform” pilot announced last week. The catch is that extravagances — and certain ancient marriage traditions — will be officially frowned upon.

The goal of the reform is to eliminate costs and customs that are contributing to China’s declining marriage and birth rates. Longer-term, officials hope, the reforms will help prevent a looming population decline. It’s a risky bet. For decades, the central government has, with a few exceptions, allowed Chinese families to conduct their personal affairs with little interference. Extending state regulation to wedding customs is a significant reversal. Rather than produce a baby boom, it’s more likely to produce resentment.

Historically, Chinese marriages were arranged to create the best possible union between families (the couples themselves were often secondary concerns). To secure the arrangement, a groom’s family was expected to pay a “bride price,” which could include everything from jewelry to cash to farm animals.

In less affluent circumstances, the price was considered compensation for a daughter’s lost labor; elsewhere, it was viewed as a demonstration of sincerity and a means of binding the families. The practice persisted openly until the 1950s, when China’s new Communist government outlawed forced marriage. However, in the 1980s it re-emerged as the economy and politics re-opened.

The modern incarnation includes some twists. Because Chinese law favors the property rights of men in the event of a divorce, the bride price protects a wife and her family if the marriage goes south. In rural communities, where women are relatively scarce (due to the lingering effects of population-control policies), bride prices are rising rapidly. In some areas, it’s not unusual for families to ask for $30,000 or more for their daughters — a sum that could clean out the savings of a groom’s extended family.

Understandably, rising bride prices are often cited as a key reason for the country’s declining marriage rate. But other expenses weigh heavily too.

In China, wedding banquets are richly symbolic events that not only celebrate the couple, but allow a groom’s family to demonstrate respect and bond with the guests (banquet-related corruption is a longstanding problem). To do so, families spend, often lavishly. For the upwardly mobile and socially ambitious, this has led to a kind banquet arms race (and contributed to China’s booming, $130 billion wedding industry).

For decades, the authorities have been content to leave such matters to families. But China’s looming demographic crisis, combined with President Xi Jinping’s desire to ease pressure on a squeezed middle-class, is changing the equation. In April, the government announced that the wedding-reform plan would be piloted in 15 cities and districts. Among other goals, it aims to reduce the costs of marriage and eliminate vulgar practices — such as groom-hazing — that are out of tune with “core socialist values.”

As with most Chinese regulations issued on a national level, the details have been left to local governments to sort out. This had led to a period of rapid wedding-custom innovation, along with official attempts to counsel moderation. In Chengdu, for example, the government has constructed a romantic lover’s lane, complete with heart-shaped traffic signals, along which couples are urged to contemplate the seriousness of their new union — and the merits of group weddings, which are occasionally held alongside.

Elsewhere, the persuasion is more overt. Guangzhou has established premarital counseling services that, among other things, provide the local government an opportunity to discourage couples from following expensive wedding customs. In rural Shaanxi Province, where women are especially scarce, a committee of “prestigious villagers” lobbies families to reduce their bride prices.

In one case, the committee succeeded in shaving 60,000 yuan ($9,300) off the sum after six hours of talks with the bride’s mother. In Chongqing, location of the most recently announced pilot, the government will soon require local leaders and social-media celebrities to certify their adoption of “simple and moderate” wedding practices.

None of these efforts will succeed in overturning traditions that, in some cases, date back thousands of years. More important, they’re unlikely to change the minds of women who’ve decided to put off marriage and children to pursue careers. At best, they might stigmatize ostentatious banquets. But more heavy-handed efforts will only drive the most expensive rituals out of sight — into the private sphere that Chinese families fiercely defend as their own.

Updated: 8-20-2021

China Allows Couples Third Child Amid Demographic Crisis

China will now allow couples to legally have a third child as it seeks to hold off a demographic crisis that could threaten its hopes of increased prosperity and global influence.

The ceremonial legislature on Friday amended the Population and Family Planning Law as part of a decades-long effort by the ruling Communist Party to dictate the size of families in keeping with political directives. It comes just six years after the last change.

From the 1980s, China strictly limited most couples to one child, a policy enforced with threats of fines or loss of jobs, leading to abuses including forced abortions. A preference for sons led parents to kill baby girls, leading to a massive imbalance in the sex ratio.

The rules were eased for the first time in 2015 to allow two children as officials acknowledged the looming consequences of the plummeting birthrate. The overwhelming fear is that China will grow old before it becomes wealthy.

China long touted its one-child policy as a success in preventing 400 million additional births in the world’s most populous country, thus saving resources and helping drive economic growth.

However, China’s birth rate, paralleling trends in South Korea, Thailand and other Asian economies, already was falling before the one-child rule. The average number of children per mother tumbled from above six in the 1960s to below three by 1980, according to the World Bank.

Meanwhile, the number of working-age people in China has fallen over the past decade and the population has barely grown, adding to strains in an aging society. A once-a-decade government census found the population rose to 1.411 billion people last year, up 72 million from 2010.

Statistics show 12 million babies were born last year, which would be down 18% from 2019’s 14.6 million.

Chinese Over 60, Who Number 264 Million, Accounted For

18.7% of the country’s total population in 2020, 5.44 percentage points higher than in 2010. At the same time, the working-age population fell to 63.3% of the total from 70.1% a decade ago.

The shift to the two-child rule led to a temporary bump in the numbers of births but its effects soon wore off and total births continued to fall because many women continued to decide against starting families.

Japan, Germany and some other wealthy countries face the same challenge of having fewer workers to support aging populations. However, they can draw on investments in factories, technology and foreign assets, while China is a middle-income country with labor-intensive farming and manufacturing.

At its session Friday, the Standing Committee of the National People’s Congress canceled the leveling of fines for breaking the earlier restrictions and called for additional parental leave and childcare resources. New measures in finance, taxation, schooling, housing and employment should be introduced to “to ease the burden on families,” the amendment said.

It also seeks to address longstanding discrimination against pregnant women and new mothers in the workplace that is considered one of the chief disincentives to having additional children, along with high costs and cramped housing.

While female representation in the labor force is high, women, especially those with children, are severely underrepresented at the higher levels, holding just 8.4% of leadership positions at the central and provincial levels. Among the young party leaders who will take the reins in the coming decades, only 11% are women.

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