When baby formula is hard to solve

Momentous as the announcement was, the abandonment of China's one-child policy is unlikely to bring about the changes to the country's demographics that the government might hope for. For one thing, the policy - implemented in 1980 to manage scarce resources - had been eased through the years as fertility had dropped, so that by 2013, a couple could have two children if one of them was an only child. This means the new two-child policy will affect a smaller proportion of the population than it might otherwise have.

Furthermore, economic and social development in China has meant that many Chinese, particularly urban couples, are happy with just one child or even none. Rapid urbanisation has led to nuclear families, meaning less help from extended family members; a breakdown of traditional values; unaffordable urban housing and high cost of living, which have conspired to discourage child-rearing. Fewer than 1.8 million of the 11 million couples eligible to have a second child under the 2013 policy relaxation have applied for permission to do so. The number of babies born as a consequence of that policy adjustment was just 470,000, far short of the estimated two million.

The one-child policy, draconian as it was with forced abortions and sterilisation taking place despite being illegal, served the purpose of keeping the country's population down, reducing the strain on resources and giving children better opportunities in education and work. Now, there is greater awareness that a rapidly ageing population and shortage of labour will impact on economic growth and fiscal sustainability. These are gargantuan issues other countries are also facing. The proportion of retirees to workers in industrialised countries is expected to double by 2040. Consequently, as the Wall Street Journal noted, "many countries will have to face additional public spending of more than 5 per cent of gross domestic product" for healthcare, old-age support and long-term care programmes.

For China, another worrying issue is the unbalanced male to female ratio, one of the worst in the world at 115 to 100. The Chinese people's traditional preference for a male child as insurance for old age, together with the one-child policy, has led to the skewed gender ratio as couples abort female foetuses, leading to men not being able to find wives and even to trafficking in women. Such social factors make the baby conundrum a difficult one to resolve. Even if younger couples oblige by having more babies, there is a time gap of at least 15 to 20 years before their offspring start to enter the workforce. Demographic change and policy might not keep pace with each other. The cumulative impact of this will be felt keenly when the population size peaks and starts to taper - in China's case, by 2050. That is not a lot of time to prepare for social change on a massive scale.

This article was first published on November 12, 2015.
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