China introduces a three-child policy, with far ranging cultural and commercial implications

It’s been a looming worry for years – that China’s population would get old before they got rich, largely as a result of first, a strictly enforced one-child policy in the 80s, relaxed to two children per couple in 2015. Now three children will be allowed, Beijing has announced. But after facing years of restrictions on family size, many people may find it tough to adjust to even the idea of a bigger family, let alone the financial and social costs involved.

Why it matters

Data from China’s 10-yearly census, recently released, reveals a rapidly aging population, along with declining fertility, and so projects a falling – and aging – population. Such an imbalance has profound implications for economic development.

• Social media posters, for the most part, met the announcement by questioning whether the relaxation of the rules would make much difference, citing such disincentives to having children as the high cost of housing and the need to provide expensive private tuition to allow young people to succeed in the country’s highly competitive education system.
• There has been a decline in state-provided childcare in China, which has meant the greater burden of looking after children has fallen disproportionately on women, who might otherwise have worked. And women in China are already confronted with a widening gender gap, both of participation in the workforce and of earnings.
• Relaxing the two-child policy is unlikely to be enough by itself, experts believe; instead, how generous the economic incentives Beijing has said it will provide, will be key. So far no details have been announced. When the country scrapped its one-child policy in 2016, there was a short-term pick-up in births, before the trend returned to a decline as costs went on rising. 
• China’s fertility rate is currently just 1.3 children per woman, which puts the country on a par with Japan and Italy, and well short of 2.1 rate needed to halt population decline.

Key quote

"Having just one child or no children has become the social norm in China. Social and economic patterns cater to the one-child policy, so the inertial effects linger on." Yi Fuxian, senior scientist, University of Wisconsin-Madison, and author of “Big Country with an Empty Nest”.

Sourced from Reuters