2016-11-01

China's 2-Child Policy Can't Stop Fertility Collapse

Chinese births by year
China's fertility rate is the world's lowest according to the latest Chinese data:
Recently, "China Statistical Yearbook 2016" published in 2015, 1% of the national population sample survey, China's total fertility rate in 2015 was only 1.05. The fertility rate below the World Bank data for all other 199 countries and regions, the latest in 2014. In other words, if the fertility rate of 1.05 is true that China's fertility level is the lowest in the world, rather than one of the lowest.
It's worse than it appears. Not only does China have the world's lowest fertility rate, but it has a shortage of females in the population due to selection effects, a result of the one-child policy. China's replacement fertility rate is 2.2, not 2.1 as in other countries.

China's economic policies are also fertility killers. Urbanization depresses fertility rates. Even rural areas have below replacement fertility, but moving to the city sends fertility rates plunging. Densely populated cities such as Shanghai also don't have a monopoly on crashing fertility rates. One 2015 study in Yichang, Hubei showed fertility was only 0.81, showing rural areas in some cases have below average fertility. There is also a concern the national survey have been overestimating fertility rates.

The chart below shows fertility rate broken down by child. The first row is first child; then second child; third and up; total fertility at the bottom.
A small bump in fertility is expected the next couple of years due to the full effects of the two-child policy and a demographic effect whereby a large cohort of women who delayed pregnancy in their younger years will likely give birth:
Effect refers to the so-called progress, women of childbearing age in some years generally delayed childbearing, the sum of these years led to lower fertility. Assuming that these women are only delayed, rather than give up their reproductive, then the total fertility rate at the beginning of the year the decline will be compensated for the actual year of birth. We note that in 2015 the average childbearing age increased by nearly 1 years older than in 2014, indicating progress effects may indeed exist. The reason behind this should be further urbanization, as well as university enrollment led many young women to postpone childbearing.

However, due to the wishes of many children of female fertility and the chances of pregnancy will decrease with age, delaying fertility decreased fertility only a portion will be compensated in the future. In early 2016, taking into account the full two children began and other factors, comprehensive judgments, 2016 and 2017 will be a significant rebound in the fertility rate. In particular, with the release of the accumulation of fertility desire, 2017 will appear a small peak fertility. But after that, due to the accumulation of weakening effects, especially in the peak childbearing age over the next decade to shrink more than 40% of women, the newborn population will face a collapse.
And then the one-child policy really kicks in, and together with a rising age of first pregnancy and other effects of modernization, will collapse the birth rate.

There is a vicious circle underway as well.

1. Low birth rates lead to high investment in only children, making it very expensive to deviate from social norms.
2. Low birth rates and urban migration forces rural schools to close, sending children to schools farther away or even in urban areas. This depresses the desire of parents to have more children and may explain the rural fertility collapse seen in Yichang.
3. The one-child policy increases the burden of aging on only children.

The article calls for a full end to penalties on fertility, such as in Liaoning (hands down the worst managed province in China at the moment), which fines couples having a third child at 5 to 10 times the rate of alimony child support (for society child support). As the author of this piece points out, fertility is uneven. Given China's low fertility, it needs some families to produce 5 or 6 children to make up for those with one or zero:
Assume the desired number of children has following distribution: 6,3,2,2,1,1,0, and all the family can fulfill their desire, then the seven families will bear 15 children, the fertility rate of 2.14, barely approaching replacement level. Of these 15 children, two families have nine children, two-thirds of the total; two children families only four; and only child only two less than the total number of 1 / 7. This also means that only when three or more children families are very common, will society be just at replacement level fertility.

This also shows that a comprehensive two-child policy is not enough. Under this policy, the number of births, respectively, in the same families will become 2,2,2,2,1,1,0, namely a total of seven families bear 10 children, the fertility rate was only 1.43. That is when people feel two children is very common for families with children, the fertility rate has been far below the replacement level.
The scary thing for those worried about demographic effects is baby bonuses aren't working in South Korea:
Since 2005, South Korea began to introduce a variety of policies to encourage fertility, but the fertility rate is still hovering between 1.1 to 1.3. September 2010, South Korean President Lee Myung-bak announced plans to invest 3.7 trillion won to encourage fertility. This huge budget will be used to support the average family child care and parental education, 70% of households in Korea will benefit, before South Korea began on the birth of a third child families bonuses. But South Korea's fertility rate in 2014 remained at the low levels of 1.21.
Finally, the author concludes with a warning: Liaoning's low fertility rate is a harbinger for China:
Although the economic downturn in Liaoning have a higher starting point, even the concept of institutional reasons accounting terms, it is undeniable that, long-term low fertility rate is a fundamental factor in Liaoning economic malaise. In such a bleak outlook of the population, not to vigorously encourage fertility, but three children is strictly prohibited, and rely on large-scale investments to further revitalize Liaoning tantamount to wishful thinking. From the population situation, Liaoning just a decade or two faster than the national. Unless the country can succeed in greatly enhance the fertility rate to a sustainable level, Liaoning today will be China tomorrow.
Where have I heard that before?

Demographic trends tend to last for a long time before shifting. Back in 1970, people were worried about a population bomb. Now after decades of steady decline, people are worried about the reverse. It's important to remember that much of the concern is tied to bankrupt social welfare systems. People who rely on those system, and those who will bear the burden of paying it, are worried. For others, it's not as big a concern.

Deflation is also likely to move the needle on fertility. If massive amounts of wealth are destroyed, the cost of having more children (in missed vacations or lower total income) will be reduced. Or, if wealth is maintained, in the near future the Millennials of the West, Japan, China and elsewhere will inherit a large amount of land, property and assets such that having more children is not a burden.

iFeng: 人口雪崩!中国生育水平已是全球最低 没有之一

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