The Role of Family Planning in China’s Demographic Transition - SOAS China Institute

//The Role of Family Planning in China’s Demographic Transition

From One Quarter to One Six of World Population: The Role of Family Planning in China’s Demographic Transition

Photo credit: Bran Liang (Unsplash)

By Jane Du | 26 March 2024

Family Planning and the Looming Labour Shortage

 

The days when one in four people in the world were Chinese seem to be a thing of the past. It is commonly acknowledged that in modern society, fertility inevitably declines as industrialization progresses. In the case of China, this phenomenon has been expedited by the government’s decades-long population control, shaping a rapid reduction in China’s share in the global population and a significantly compressed demographic transition compared to the rest of the world. Population control in China traces its roots back to the CCP ideology of centralised planning. The authorities recognized necessity of robust policies to shape the future layout of the country’s demography. These population policies have integrated into the ruling party’s quest for ideological legitimacy, as it is rooted in the belief that the population, in addition to capital, is a key component that contributes towards a nation’s economic growth.

 

For China, a country that once boasted the world’s largest population, labour shortages were seldom a concern. In fact, in response to the population boom experienced during the 1950s and 1960s, the Chinese government initiated a series of efforts beginning in 1962 to manage and stabilize its population size to maintain a steady state in terms of per capita resources. The culmination of these measures was the introduction of the stringent “one-child policy” in 1981. Indeed, the one-child policy effectively relieved the young labour force from childbearing obligations from the 1980s to the 2000s. They also become part of a continuous labour force that played a pivotal role in China’s rapid industrialization and economic take-off. However, as China grapples with ongoing demographic shifts, it will increasingly encounter challenges in supplying the necessary labour force to sustain its economic development and income transition.

 

Since the early 2010s, there have been growing calls for the Chinese government to ease population control policies, driven by the looming threat of labour shortages in China. A reduction in the overall labour supply can trigger a resource outflow and result in a growth pattern constrained by labour availability. An illustrative instance of this phenomenon can be seen in the slowdown of China’s industrial sector. The dwindling working-age population and the escalating burden of an aging population would rapidly erode the country’s advantages in labour-intensive sectors. This, in turn, may lead to reduced capital inflows, which are vital for sustaining rapid industrialization in certain cases.

 

The Time Window of Population Policies

 

Unlike economic policies, population policies have their unique constraints. The impact of population policies on changing fertility patterns takes years to become evident and stable, and reversing their effects can be challenging. Many of the prominent demographic characteristics in China today are a result of past population policies. For example, Mao’s promotion of childbirth was considered suitable for China’s post-war socio-economic conditions. However, when the baby boomers of the 1950s and 1960s started entering the workforce, the sudden increase in labour supply became a contributing factor to serious social and economic issues, including unemployment, in the 1980s and 1990s. This presented a significant challenge that could undermine the legitimacy of the Deng government and hinder the country’s development. Consequently, Deng implemented the stringent one-child policy. Unlike some other policies, the effects of population policies take a generation to become noticeable in the labour market. While population policies can successfully achieve the country’s initial policy goals, such as reducing the population, they cannot guarantee that these goals will still be relevant or desirable after a generation has passed. This highlights the long-term and irreversible nature of demographic changes influenced by population policies.

 

The Deng government believed that achieving a higher per capita resource allocation was pivotal to economic success, and they perceived a large Chinese population as an impediment to achieving this goal. The one-child policy successfully reduced birth rates, aligning with Deng’s objectives. However, it also left the Xi Jinping government grappling with the consequences of a rapidly aging society and a labour market that had deteriorated significantly, a situation that may persist until at least 2050. This turbulence, driven by policy shocks and demographic changes, serves as the backdrop for China’s current two-child policies and the impending need for labour market adjustments. As a decline in labour supply becomes inevitable, it becomes crucial to carefully study how to effectively adapt labour market segmentation to make efficient use of the available labour pool. This presents a complex challenge that requires thoughtful consideration and strategic planning.

 

Based on the results of population easing policies, it seems that the current two-child and three-child policies are unlikely to reverse the ongoing declines in China’s birth rate, total fertility rate, and even the overall population size. In other words, after decades of fertility control measures, having one child has become deeply ingrained as a social norm, and it would be challenging for population policies alone to change this norm in today’s China. This fundamental social institution and framework have exerted a decisive influence on the country’s economic transition. China’s current labour market is grappling with serious structural unemployment, primarily due to the mismatch between labour supply and demand. This situation may further exacerbate the country’s existing labour supply issues, leading to inefficient utilization of the available labour force. Addressing these challenges will require comprehensive strategies that extend beyond population policies.

 

In conclusion, if China had pursued a more gradual path of demographic change without stringent fertility control, the country’s economic growth over the past four decades would likely have been much slower. On the other hand, the implementation of fertility control policies has led to the rapid aging of the population and a significantly deteriorated labour market, with a sharp decline in labour supply expected in the near future. This underscores the two-sided effects of China’s stringent population policies and highlights the irreversible and determinative impact of demographics on China’s income and demographic transitions.

Jane Du is a Research Associate at the SOAS China Institute. She has published extensively on economic policy modelling, Chinese agriculture, as well as demographic economics in professional journals including, The China Quarterly, European Review of Economic History, Journal of Policy Modelling, Social Science in China (restricted version), Applied Economics, PLoS One and Journal of Contemporary China. She is also the single author of Agriculture Transition in China: Domestic and International Perspectives on Technology and Institutional Change, and China’s Labour Market 1950-2050: The Role of Family Planning in Demographic and Income Transitions.

The views expressed on this blog are those of the author(s) and are not necessarily those of the SOAS China Institute.

SHARE THIS POST