China demographics and the two-child policy

China’s recently announced change from a one-child to a two-child policy has led to considerable media comment, including from our own Prime Minister at the New Zealand China Business Summit on 9 November. The media focus has been on the demand this will create for infant formula. However, much of the commentary has lacked an understanding of China’s demographics.

Relaxation of the one-child policy will lead to a short term increase in birth rate but it will only be short term. The reason for this is that the number of women in the child-bearing ages is about to decrease drastically.

There are three factors that determine China’s birth rates:
1. the number of women in the child-bearing age groups,
2. the number of children these women wish to have, and
3. the number of women the Chinese State says they are allowed to have.
This third factor only comes into play to the extent that it constrains the second factor.

The best way to understand the situation is to have a look at China’s so-called population pyramid, reprinted here from Wikipedia under a creative commons licence. This pyramid is constructed from the latest China Census in 2010. As such, the ages of everyone in 2015 are another five years from what is shown here.

China's demographics as at the 2010 census

China’s demographics as at the 2010 census

To understand the graph – which has unique features compared to any other country – we need to go back in history to the founding of the Chinese People’s Republic in 1949. The reason for this is that ‘echo’ effects of what was happening then can be seen right through to the present.

Following decades of internal turmoil, China achieved a level of internal stability throughout much of the 1950s and the population soared. At that time, Chinese women typically gave birth to between five and six children over their child-bearing lives.

Things changed drastically in 1959 with comprehensive drought and also linked to the failures of the so-called ‘Great Leap Forward’. In the three years from 1959 through 1961, births only averaged 15 million per year compared to about 20 million in the preceding years. In the worst year of 1961, there were less than 12 million births. This shows up right through to the present, with a markedly reduced number of people in the 2010 population pyramid aged 49 to 51 (i.e. currently aged 54-56).

Once China got over the drought and what could now be termed the ‘great leap backwards’, births surged to almost 30 million in 1963. From there on, births declined steadily through to 1979 at just over 17 million per annum.

The declining birth rate post 1963 was predominantly a function of Chinese women deciding to have a lot less children, which has been a phenomenon common to most developing and developed countries. Although this decline was occurring well before China’s one-child policy (implemented in 1979), there was definitely, from the mid-sixties, a set of Government policies to encourage these changes.

In amongst all of this there was one year when births were considerably lower than other times. This was in 1966, a year of disruption from the Cultural Revolution, when people had other things on their minds rather than making babies.

When I first went to China in 1973, we were shown clear evidence of programs encouraging use of contraceptives and also encouraging couples to delay marriage. I also recall having discussions with one of our interpreters – a young lady in her early twenties – about the large number of unmarried mothers in Western societies. She could not understand how this could be biologically possible, no doubt based on her own experiences where unmarried folk never had the opportunity to be alone.

The one- child policy was implemented in 1979 but in fact had no observable effect on the overall number of births. Indeed births actually increased in the years thereafter.
This paradoxical situation was because the huge cohort of women born in the 1950s was now coming through to child-bearing age. Any reduction in births per mother was more than compensated by the large number of potential mothers.

So births increased again through the 1980s to reach a maximum of 25 million in 1987. From there it decreased steadily to some 15.9 million in 2010. (The population pyramid shows even less than this for 2010 births, but this is probably because the 2010 national census was taken at 1 November, and so two months were still to come.)

Since then, from other Chinese data we know that birth numbers have increased slightly to an estimated 16.8 million in 2014. This increase is mainly due to progressive relaxation of the one-child policy. First, it was couples who were themselves both from one-child families who were allowed a second child. Then, it was couples where only one of them was from a one-child family. And now it will be everyone who can have two children.

When policies such as these are relaxed then the immediate effect is to release a pent-up baby demand. There will be lots of couples in their thirties who will say let’s get on and have the second child before nature gets in the way. However, that pent-up demand only lasts for a couple of years before it settles down again.

Looking back, one can see how the one-child policy, although abhorred in Western countries, was important in bringing China’s population under control. However, with hindsight there is now a strong argument that it should have been relaxed many years ago.

Already China’s working age population is in decline, with more people retiring than entering the workforce. That will increase over the next ten years even if China raises the retirement age.

The reason that the uptick in births over the next few years will be short term is because the number of women coming through into child-bearing age over the next 20 years will average less than eight million per year. Each of these women would need to have more than two children just to maintain births at the current level.

In contrast, the current evidence is that many Chinese women do not want two children. So unless there are considerable changes in societal attitudes, birth numbers will, by 2020, be declining again.

There are also considerable regional differences to be considered. For example, according to Wikipedia, the 2010 census reported a total fertility rate (TFR) of 1.18 (0.88 in cities, 1.15 in townships, and 1.44 in rural areas). This fertility rate measures the average number of children per woman.

The five regions with the lowest fertility were Beijing (0.71), Shanghai (0.74), Liaoning (0.74) Heilongjiang (0.75) and Jilin (0.76). Apart from Shanghai, these are all in the north.

The provinces with the highest fertility rates were Guangxi and Guizhou, both poor southern provinces, with 1.79 and 1.75 respectively. The county with the highest birth rate was Baqing County in Tibet with 5.47.

These differences illustrate a point I often try to make: there are many ‘Chinas’. Policies are often implemented pragmatically across the nation. Also, ethnic minorities were always exempt. And there is also the old Chinese proverb that ‘the sky is high and the emperor is far away’.

One of the remarkable features of Chinese births is the high proportion of males, currently about 18 percent more than females. The natural birth ratio should be about four percent more males at birth. The difference from the natural rate is primarily due to selective aborting of female foetuses based on ultra-sound. (In the population pyramid, the ‘excess’ males show as very dark blue).

The natural difference in birth rates between the sexes has minimal importance in growing populations where men typically marry women who are several years younger. But where population rates are falling, and combined with selective abortion of female foetuses, the effects are profound.

So over the next 20 years there are going to be 20 million Chinese men coming through to adulthood for whom there are no female partners. This is a situation we have never seen anywhere in the world. Will Chinese women be allowed to marry two men?

From New Zealand’s perspective, and recognising China as inevitably our most important trading partner of the future, the big message from the population pyramid relates more to older folk than to babies. Over the next ten years there will be a huge surge in the 55 year plus age bracket. So it is tourism and old-age products rather than infant formula where the big change will occur.

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About Keith Woodford

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.
This entry was posted in Agribusiness, China, Dairy. Bookmark the permalink.

6 Responses to China demographics and the two-child policy

  1. binward says:

    Totally agree Professor. I also think the major impact from the one-child policy on China is the imbalance of gender proportion of population. For infant food, we may also need to take into account the significant impact from urbanization in China which will greatly drive its demand for imported baby food.

    • Keith Woodford says:

      Yes, I agree about the effects of urbanization, and also increasing incomes and consumer expenditure. Those changes will affect a great range of foods, not just infant formula. But those markets will not simply fall into our lap. The rest of the developed world also has its eyes on those opportunities.
      Keith Woodford

  2. Honora says:

    Thanks for mentioning that the ethnic minorities have had no restriction on the number of children they are allowed to have. The China-bashers often failed to mention this. It’s the opposite of ethnic cleansing…

    • Keith Woodford says:

      Honora, I am part of a grassland sustainability project on the Qinghai-Tibet Plateau at between 3600 and 4000 metres altitude. The people there are all ethnic minorities, mainly Tibetan but also Mongolian. (The Mongolians came through and settled there in the times of Genghis Khan, his sons and grandsons). I believe the official policy up there in recent years has been two children per family (rather than three or four which was previously acceptable), but even the two child policy has never been enforced strictly in most of these distant rural areas. One of the challenges up there is that the population has now increased to a level that is non-sustainable relative to the plateau resources. One of the things I have learned from this and other work is that many of the issues are more than a little different than how they are portrayed in our media. It is the same in parts of the Vietnam Highlands and mountain regions (where I have also undertaken project work) which are populated by ethnic minorities. There are no easy answers.
      Keith

  3. Tom Walker says:

    And to add to what Honora says..the Chinese with a rural i.d card were allowed another child if the first child was a girl.

  4. Mark Leggett says:

    I very much agree with this commentary. I’m currently working in developing health and support services for elderly in China, acknowledging the potential in the significant development and maturation tasks for the health sector there in the next few years. The changing demographic is already putting pressure on the overall health sector, with the 12th, and the upcoming 13th Five Year Plans, containing strong statements and policies about aging and support. This, along with overall improvements in health outcomes, which increase longevity and service expectation, is part of the incoming tide about which the PRC Government is hugely concerned. China may have the leading economy on the global stage right now (in real and potential terms), but it will be put at significant risk related to the impact of the health (dis)economy of scale and its associated financial and political cost risks.

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