This is a Part 4 of a series of articles on: Why the Upcoming Crisis in China would be very painful. Read our previous post here please.
Like everywhere else the economic growth rate in China is highly dependent on the growth of its labor force. Therefore, here I will refute two simplistic myths about the impact one-child policy makes in China.
Myth 1: Low birth rates in China were a result of the One-Child policy there.
Myth 2: After the reversal of the One-Child Policy, population trends would recover.
Have a look at the Figure 1 – birth rates were dropping in China for almost 14 years before the One-Child policy was introduced.
How come? We all crave for simple explanations for complex events as our brains are lazy to contextualize and properly interpret intertwined forces, and our judgements are quick to slide to reductionist introspections. But there were more to dropping birth rates in China than just the One-Child policy.
Firstly, while the One-Child Policy didn’t help, it certainly was not the key force behind the drop in fertility. In reality, China’s one-child policy applied to less than 40% of its population. There were numerous exemptions granted, for example:
- Personal connections secured a discount on fines (as always) for having a second child
- In rural areas a second child has been allowed if the first was a girl
- In Shanghai if a person worked in the fishing industry, and has been going to sea for 5 years, the couple was allowed to have a second child
- Ethnic minorities were exempt from the one-child rule
- Parents without any siblings themselves were allowed to have a second child
- Etc, etc, etc
Secondly, and far more importantly, at that time East Asia (including China) was experiencing profound socio-demographic changes. See the Figure 2, that clearly plots birth rates dropping across South-East Asia, following the intertwined patterns of social and economic developments experienced previously by Europe. The demographic future of China would inevitably look almost irreversible – the country faces a strong demographic headwind for at least 20-30 years.
In the following pieces we will talk about rural-to-urban migration and deteriorating dependency ratio.