E-Paper
China should lift birth restrictions to take on India, US economically: Report
China’s birth rate has been falling for years. That’s why the government eased the one-child policy, which was in place since the late 1970s, in 2016, allowing couples to have two children.
China should lift all birth restrictions to tackle the problems of an ageing population and plan ahead to compete economically with a demographically young India and an immigration-friendly US, a new report by the central bank has said.
A working paper released by the People’s Bank of China (PBOC), China’s central bank, made public on Wednesday said the country’s ageing population problems were worse than that of other nations.
Primarily focused on how China should tackle the problem of its ageing population, the paper - written by four PBOC researchers - compared the country’s situation to India and the US, making the radical suggestion that the government allow three or more children per household.
China’s birth rate has been falling for years and that was why the government eased the strict one-child policy, which was in place since the late 1970s, in 2016, allowing couples to have two children.
The easing of the policy hasn’t worked, though.
The birth rate on the Chinese mainland dropped to 10.48 per 1,000 people in 2019, the lowest in seven decades, according to the National Bureau of Statistics; the statistics of 2020’s birth rate has not been released.
“In order to achieve the long-term goals in 2035, China should fully liberalise and encourage childbirth, and sweep off difficulties women faced during pregnancy, childbirth, and kindergarten and school enrollment by all means,” the report “Understanding and Countermeasures of Demographic Countermeasures in China” said in its abstract.
“Since 1949, the population of China has expanded rapidly to slower growth, the population structure has changed from pyramid to rectangle, and China’s population transition is faster, and ageing problem and sub-replacement fertility is severer,” the report said.
IT’S ADVANTAGE INDIA
In a detailed section on India, the report said the gap between the two countries is narrowing.
As two big countries in Asia, China’s economic growth has been faster than India’s for a long time but in recent years, with India’s late-comer advantages, China’s demographic dividend fading, India’s economic growth has tended to approach China’s, the report said.
More importantly, it added that China’s ageing population and the declining birth rate will become more serious in 10 years while India’s demographic structure will be further optimised.
The report pointed out that India’s labour force will exceed China’s by hundreds of millions in the years ahead. “In 2019, China’s labour force was 990 million while India had 880 million, which is 110 million less than that of China. In 2035 and 2050, India will have 1.06 billion and 1.11 billion labour force respectively, which is 120 million and 270 million more than those of China.”
It added that India’s pension burden will be lighter than China’s in the future.
“In 2019, the dependency ratio of India was 8.3 percentage points than that of China, while in 2035 and 2050, the gap will be widened to 18 and 23.3 percentage points; In 2019, the proportion of the elderly in India was only 6.4%, 6.2 percentage points lower than that in China. In 2035 and 2050, this advantage will expand to 11.1 percentage points and 12.3 percentage points.”
By 2050, India’s demographic advantage will continue to expand, the report said, adding that in 2019, the demographics of India were much narrower at the top and wider in the middle than in China.
“By 2050, this advantage will continue to grow. Not only will India have a much narrower elderly population at the top and a much wider workforce in the middle, but it will also have a wider workforce at the bottom, indicating a more abundant workforce and greater growth potential beyond 2050,” the report added.
The report went on to argue that since India’s demographic advantage is expected to grow for at least the next three decades, “…India’s demographic dividend will blossom more significantly and the gap between China and India will be narrower provided that appropriate political and economic measures are taken.”
U.S. BENEFITS FROM IMMIGRATION
About the US, the authors raised the question that if China had narrowed the gap with the country over the past 40 years by relying on cheap labour and the bonus of a huge population, what can it rely on in the next 30 years?
They noted how the US benefits from immigration even as China’s population ages.
The report pointed out what needs to be done for China to try and reverse the trend.
“China must recognise that the demographic situation has changed…recognise that population inertia is a huge force across generations, and its reactionary force will lead to changes in the population in the opposite direction; realise that education and technological progress cannot compensate for the decline in population,” the report said.
China should fully liberalise the practice of having three or more children without hesitation or limitation of the effect of the existing policy, the report added.
The authors suggested that China “…should vigorously encourage childbearing. To advocate procreation is not only the business of parents and families but also the responsibility of the state and society”.
