Saturday 31 October 2015

China scraps one-child policy amid demographic woes

Many cheer move, but some criticise decision to set the cap at two children
By Kor Kian Beng, China Bureau Chief In Beijing, The Straits Times, 30 Oct 2015

China has ended its decades-old one-child policy and is allowing all couples to have two children, in an effort to tackle demographic woes and boost the country's long-term economic vitality.

"The historic change was intended to balance population development and address the challenge of an ageing population," said the Xinhua state news agency yesterday at the end of a closed-door meeting of top Chinese officials.

The spiking of the controversial policy that has limited millions of Chinese couples since 1979 to having one child was one of the few tangible outcomes of the four-day plenary session of the Communist Party's Central Committee.

Nearly 400 officials, led by President Xi Jinping, also finalised the 13th Five-Year Plan - a development guideline listing government tasks and targets in the 2016 to 2020 period - and set a "medium- high" annual growth rate for the world's No. 2 economy.

Declining birth rates, a widening gender imbalance, a shrinking workforce and an ageing society - all cited as side effects of the one-child policy - are threatening to impede China's economic transformation efforts and add to the government's economic burden.

The one-child policy was introduced to boost economic growth in China's early years of reform and opening up. It reportedly led to 400 million fewer births in the country over the years.

Many here welcome the move to scrap the policy, but some criticised the decision to set the cap at two children, saying this could allow officials to continue with draconian measures, such as forced sterilisation, to meet birth-control targets.

Mr William Nee, a China researcher at Amnesty International, said couples still had to seek government permission to have children. "Couples who want more than two children may have to pay fines and, in some cases, will still be forced to undergo coercive and intrusive forms of contraception and even forced abortions, which amounts to torture," he told The Straits Times.

Experts also said the move might be too late, given how an earlier liberalisation of the policy in December 2013 produced disappointing results. Couples were exempted from the one-child policy if either the husband or wife had no siblings.

Previously, only couples who were both from single-child families, or from rural households and ethnic minority groups, were exempted.

Out of some 11 million eligible couples under the liberalised rules, only one million applications were received last year, with 470,000 new births registered, far off the two million target. By May this year, 1.45 million applied to have a second child.

Observers say Chinese couples now prefer to have only one child because of the rising costs of raising children, the drop in infant mortality and lifestyle changes such as better education and job opportunities for women.

The new five-year plan will be endorsed at a national legislature session next March, where the growth target would be unveiled. It is expected to be below 7 per cent for the first time in a five-year plan for China since the late 1970s.

Look what happened to the New Zealand dollar after China announced it's ending the one-child policy.
Posted by Bloomberg Television on Friday, October 30, 2015

End of one-child policy: Too little, too late?
By Esther Teo, China Correspondent, The Straits Times, 31 Oct 2015

The end of China's one-child policy is unlikely to prevent a slump in the country's economy or effectively tackle its demographic challenges in the near future, say experts, even though the move could spark a rise in new births by up to 50 per cent in the near term.

Experts are convinced that while birth rates might spike, they might not remain elevated.

Nankai University's population expert Yuan Xin estimates the total number of babies born might peak at between 20 million and 23 million before stabilising at about 18 million a year. Citing demographers' estimates, local media reports say between three million and eight million more babies could be born in 2017, the expected peak in numbers following the policy change. This would mean a rise in the number of births of up to almost 50 per cent from the 16.9 million last year.

Observers say the government's move on Thursday - making 90 million Chinese couples eligible for a second child - might have been too little, too late. This is because of the time lag between any baby boom and its impact on the workforce, which shrank for the first time in 2012. Many couples may also still opt to have only one child. "It will be at least 15 years before babies born under the new regulations are old enough to join the workforce. Increased fertility rates will not provide a solution to the worsening demographic outlook in the coming decade," said Mr Chang Liu of Capital Economics. "The one-child policy has also been relaxed a number of times over the past decade without triggering the surge in new births that officials were hoping for," he noted, adding that the economic impact of the policy shift will likely be "small".

The strict one-child policy has been progressively relaxed, with Beijing announcing in 2013 that couples could have two children if the mother or father was an only child. But this led to only 470,000 more babies last year, far below the two million expected annually.

Still, policymakers are likely hoping for the interplay between demography and economy to be felt sooner rather than later.

A population boost, for example, might lift consumption and aid the Chinese economy amid weakening growth. Its growth target of just 7 per cent this year is the weakest in a quarter century.

A shrinking workforce has further dimmed China's economic outlook. Its working-age population, aged 15 to 59, is estimated to fall by 9 per cent from this year to 2030, according to United Nations figures released prior to Thursday's announcement.

Coupled with an ageing population, this is likely to place greater stress on its US$10 trillion (S$14.1 trillion) economy, with growing concerns over the sustainability of the country's increasingly costly pension and health insurance systems.

As such, experts say Beijing should look beyond just demographics to other engines of growth such as productivity.

Growth in the workforce, for instance, made only a small contribution to China's development over the last 20 years, adding less than a percentage point on average to annual growth, Mr Chang noted.

Still, the end of the one-child policy is likely to buy China more time in tackling its demographic time bomb. If the birth rate rises from the current 1.2 per cent to 1.4 per cent a year, the speed at which China's population ages will slow significantly, according to UBS economist Zhang Ning.

"The population can be expected to peak at close to 1.6 billion people around 2050 rather than 1.4 billion around 2025 to 2030," he added.

The policy change lit up social media, with the topic trending at the top of Twitter-like Sina Weibo within hours of the announcement. Some netizens said they would start trying for a second child that night.

To have a second child or not, that is a big question for Chinese couples.
Posted by CCTV on Sunday, December 27, 2015

The NPC Standing Committee has passed a draft amendment to the Family Planning Law. The law which allows Chinese couples to have two children will take effect on January 1, 2016.
Posted by CCTV on Sunday, December 27, 2015

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