Monday, January 15, 2007

Thinking about China's one-child policy

The case of a popular Chinese singer having a second child in violation of Communist government's one-child policy has spotlighted what is perceived to be draconian by most of the Western world. Beijing responded by stating that the country has no choice but to keep the policy in effect. The artist, Mao Amin, despite the government-honoring name, is prepared to shell out the big bucks to have the kid anyway.

An aside, the policy is not as all-encompassing as it is often portrayed. It applies only to the Han, who are essentially the country's first-class citizens, comprising a little over 90% of the population. While ostensibly in place to curtail rural birthing, enforcement is lax in much of rustic China and more stringent in areas of concentrated conurbation. And rural dwellers are allowed an extra baby if the first one is a girl (so the first-born girl is protected from infanticide, but if the coin lands wrong-side-up twice in a row, the second child isn't so lucky). Also, single children are allowed to procreate twice (Mao has another sibling so she is still in violation). It is possible to circumvent the regulation by having a child out-of-country or by paying fines (both of which make the policy mildly eugenic).

Seems to me the policy is one of folly. China's economy is growing over seventeen times faster than its population is. That translates into about a $650 per year increase in terms of purchasing power parity. A doubling of China's birth rate (which, if sustained would propel the country to a total fertility rate of 3.5 kids per woman), ceteris paribus, would still see the economy growing at over five times the rate of the nation's population. A bump up to replenishment rate (from the curent TFR of 1.73), would slow current PPP growth by about $20 annually, to $630. Granted, more resources and energy would have to be devoted to extra urchins running around, so the slowdown might be more pronounced.

But the decrease in living standards that would result from a birthing increase will be offset to some degree by an attenuation of kidnapping rings (where baby girls are snatched away to be sold off as young brides to the parents of a young son, or for puproses of international adoption, where girls are disproportionately chosen over boys by foreigners from the developed world), and the settling effects a more gender-balanced population will likely bring (ie Massachusetts Bay vs Jamestown). This latter point strikes me as particularly potent, since regime stability is putatively always on the minds of the Chinese government. Also, allowing the yuan to float offers another way to boost living standards almost overnight (to the detriment of exports, but the country is running a $120 billion annual trade surplus).

It is oft-quoted that China will anomalously grow old before growing rich. To the extent that is true, it'll be the government's own doing by retaining the one-child policy. The PRC's working-age population (ages 15-64) is going to grow by over 100 million in the coming decade. By that time, at current growth rates, it'll be wealthier than Poland or Hungary are today. With a median age of 33, China is nearly a decade younger than the rest of the developed world that is facing a similar inverting age distribution.

With over $800 billion in foreign exchange reserves, a population savings rate of 30% of income, a high IQ population (100) and a rapidly expanding economy, it seems that China is shooting itself in the foot by intentionally perpetrating a fate that is likely to befall it anyway as it becomes wealthier--that of the rest of the developed world (save the US and Israel), where women are no longer reproducing enough children to sustain their populations over time.

4 comments:

St. James Smyth said...

I believe that China largely eliminated its "one-child" policy around 2002 or so, becuase it is no longer useful or necessary for continued economic growth. However, in the 1970's when China was desparately poor, the one-child policy was necessary to constrain population growth since there was no economic growth at the time.

Also, there is the question of just how many people they would want such that they can live comfortably at a high standard of living, when the birthrate will decline naturally. China's current population is 1.3 billion, which is expected to rise to 1.5 billion by mid-century. The Beijing government estimates that the current population would be 1.6 billion and would level off at around 2.0 billion, if they had never implemented the one-child policy.

Could 2.0 billion people live just as high of standard of living as the expected 1.5 billion? Probably. With nuclear power and bio-nanotech, I'm sure they could live far higher standard of living than anyone alive does today. However, at some point, the crowding becomes so intense that it becomes a real pain (not to mention expensive) to, say, go on holiday to Hainan island or S.E. Asia. What ultimate population is ideal?

Certainly the "population bomb" people like Paul Ehrlich and others had it completely wrong. However, optimists like Julian Simon and John McCarthy look only at material standard of living and fail to consider non-material aspects like having wide-open spaces and uncrowded white-sandy beaches to enjoy without paying an arm and a leg.

crush41 said...

St James,

An ideal population size is difficult for any nation to surmise. Generally though, I'd assume replenishment is by default a smart target. China is already about 15% below that, and assuming it follows in the same pattern as the rest of the developed world, the country's fecundity is only going to decrease as the standard of living continues to rise.

I suppose the PRC will have plenty of time to see how Western Europe and the other tigers like South Korea and Japan fare the inversion of their age structures.

nzconservative said...

Living in a country that could easily be swapped by Asian immigration, I'm glad that China's population growth is slowing.

Similalry, I still think many countries (such as Nigeria and Pakistan) have excessive population growth rates and may well suffer malthusian collapses when the West gets tired of bailing them out.

However, I agree that China now needs to loosen things up a little and aim for population stabilisation.

Instead of talking about global overpopulation we should probably start talking about global population inbalance.

crush41 said...

NZ,

Yes, both in terms of differences between countries, and the inverting influence of the age structure it virtually all of the developed (and much of the developing) world.