China’s Policies Evolve to Reflect Current Population Realities:

On October 28, China announced that it is planning to relax its current “one-child” policy for the estimated 90,000,000 eligible Chinese families that may wish to add a second child to their family. The surprising announcement comes 35 years after the one-child policy was implemented amid fears of a catastrophic population explosion. At the time (1980), China was unsure of its ability to support its population, which was rapidly approaching one billion people. Reducing the number of children born appeared to be a reasonable method of controlling growth. Thirty-five years on, however, the negative impact of the policy is being felt at all levels of society and industry.

“One” Is Not The Only Significant Number:

Statistics reveal a broad view of the policy’s impact:

Gender Imbalances – Fewer Births Overall, Especially of Girls:

Girls are traditionally viewed as less valuable than boys in the strongly traditional country, so families that elected to illegally choose the gender of their offspring often chose boys over girls. An estimated 400M births were averted through the use of contraception and also through more barbaric means of forced abortions and infanticides. The consequence of those actions is the imbalance of gender ratio between the sexes, with almost 20% more boys born than girls born.

Insufficient Resources for an Aging Population:

Because China’s traditional family structure requires children to support their aging parents, the one child policy has dramatically altered the quality of life for millions of aging parents and their sole child. These days, millions of Chinese households consist of four grandparents, two working parents and one child, who is ultimately expected to care for all the elderly people as well as any children she or he might have. The economic impact of that structure is understandably oppressive to that child.

This statistic is made more significant by the “greying” of the Chinese population in general. By 2050, as much as 25% of the country’s population will be over 65 years old, compared with only 9.7% in 2013. The majority of those will have left the workforce and be drawing living expenses from either the resources of their offspring, or those of the government. While other countries have equally aging populations (Japan, for example), their governments have also established solid social security systems to support those senior citizens. China has not established such systems, and the impending flood of seniors is thought to be one of the drivers behind relaxing the one-child policy.

Economic Statistics Also Play into the Challenge:

Through the years, families that denied or avoided the policy, and had an additional child, were fined. Those fines have added up and are thought to have contributed an estimated two trillion yuan (₤206bn, $315bn) to the Chinese economy. Many villages rely on those revenues to maintain their infrastructures. One family, that of filmmaker Zhang Yimou, was fined 7.5m yuan ($1.2bn, ₤772,000) for having their third child in 2014.

Future Chinese Economic Growth Depends on Population Size and Age:

At least one commentator sees the change as a reflection of the need for more employable workers in the next few decades. Mei Fong writes for the Wall Street Journal. As the fifth daughter (with no brothers) of Chinese parents, she grew up in Malaysia and knows that she wouldn’t exist if her parents had remained in China. She has been based in China since 2003.

Fong experienced first hand the significance of the one-child policy. While following a group of workers home to their village after a devastating 2008 earthquake, she watched while many of the workers learned they had lost their (only) child in the quake. Because of their age, they did not have the option of having another one. At the same time, Fong, herself, suffered a miscarriage. The timing emphasized to her the immensity of the weight that was carried by that one child, and the inconsolable grief that was caused when that child died.

While she comments extensively on the social and societal impact of the policy, Fong also points out that it was the size of the population in 1980 that has significantly contributed to the growth of the country’s economy. The millions of young, available workers looking for employment have been the foundation of the megalithic manufacturing sector that grew through the 1980’s and beyond. Fong suggests that while the one-child policy didn’t impact the growth of the Chinese economy until now, its long-term effect of reducing the available workforce will almost certainly have an impact on China’s future economic growth.

China Continues to Evolve:

China has been making fundamental shifts in its policies, laws and processes as it struggles to stay in the forefront of the world’s manufacturing sector. Changing the one-child policy appears to be just another step in that progress. How it will ultimately affect the country’s economy is yet to be seen. To discuss the possible implications of the change on your Chinese supply chain, contact us.

I can be reached at carsten@vantagecompliance.com or on (+61) 413 089 020

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