Ease one-child policy and invite disaster

Many experts claim the period of "demographic dividend" would be over for China by 2015. They, thus, urge the government to loosen its family planning policy that would increase the supply of labor to maintain the country's high pace of economic growth.

What they don't realize is that after the "demographic dividend" period is over, China will face a real problem, the problem of an aging society. People who say China should loosen its one-child family policy believe that the problem of caring for the aged can only be solved by having more young people in society. That is, a higher birthrate.

The truth is different. The government can use other, and more foolproof, means to address the aging population issue, such as taking steps to ensure continued economic growth and expand social wealth. What will really fuel economic growth is the quality of workforce, not the number of people.

It is obvious that once the family planning policy is loosened, most of the couples would choose to have more than one child. According to a survey on reproductive health, conducted by the National Population and Family Planning Commission, 35 percent of the woman respondents supported the one-child policy. But 57 percent of them said they preferred a two-child policy and about 5.8 percent wanted to even have more than two children.

Even in Shanghai, China's most developed metropolis and where the cost of bringing up a child is very high, a majority of the couples wish to have a second child. A Shanghai Municipal Population and Family Planning Commission survey, covering 4,800 people aged between 20 and 30, shows a majority of them (50.1 percent) want to have more than only child. All the respondents are children of single-child parents.

Considering the economic condition of most Chinese families, more children in a family would mean less money to spend on a child's education. This shows the higher the number of people, the lower their overall intellectual and productive quality. Which means increasing the birthrate will not solve the country's aging population problem.

The solution to the urban aging population problem depends mainly on urbanization and immigration. It has become an urgent task to address the aging population issue by implementing better pension schemes in urban areas, especially in cities where the life expectancy is high, natural population growth rate is low (even negative) and the aging trend is evident.

The authorities should realize that the big cities that face the greatest pressure from an aging society are those that have the most rigid restrictions on granting hukou (registration of permanent residence) to migrants. And the reason why so many aging people in cities are facing uncertainty is that a large number of urban immigrants do not have insurance for the elderly.

Therefore, if increasing the proportion of the young workforce can solve the aging population problem, we should loosen hukou regulations rather than ease the family planning policy.

There are two advantages if more immigrants can become permanent urban residents. First, it would guarantee them a better quality of life, especially if municipal governments accord priority to awarding more college graduates with hukou. Second, in the process of urbanization, the average age of new immigrants would be markedly lower than that of existing residents, which also can significantly ease the aging population problem.

People who argue such a move would not be fair to rural residents do not understand that increasing labor productivity, driven by urbanization, is in the interest of the countryside, too. Generally speaking, when rural workforce turns from agriculture to industries or service sectors in urban areas, its income could increase several times. Such workers can then be made to pay one part of their increased income as social security tax, which can be channeled into the support system for the elderly. This process can continue from one generation to another. Besides, the new immigrants can spend another part of their increased incomes to provide for their parents living in rural areas.

Apart from improving social productivity, an appropriate increase in the retirement age could be an important way of coping with the aging population issue. The average life expectancy of Chinese has increased - from 67.8 years in 1982 to 73 in 2005. In some well-developed cities, it is about 80 years, which is as good as in developed counties.

But the retirement age of workers in Chinese cities is lower than in other countries. Hence, the government should consider increasing the retirement age gradually, based on different criteria and in accordance with the unbalanced aging problem across the country.

Under no circumstances would it be fair to increase the country's birthrate and transfer the burden of an aging society, caused by rising life expectancy, to the younger generation. The government, at least for now, should not loosen its family planning policy to tackle the problem of "growing old before becoming rich". Instead, it should adopt more social security measures to reduce the risks that one-child families face.

The author is a professor of economics in Fudan University.

(China Daily 02/01/2010 page9)