In the 1980s, the Chinese Communist Party (CCP) issued posters as part of its one-child policy which claimed, “Villagers who want to get rich: have fewer children but grow more trees”.  Although this succeeded in curbing overpopulation, it was too successful; forty years on, China is plagued with an ageing population, which will cripple the economy if left unresolved.

Low fertility rates will stunt China’s growth in three ways.  Firstly, and arguably most importantly, they will lead to a shrinking working population, the effect of which is exacerbated by the nation’s reliance on labour-intensive manufacturing, an industry which made up 32.6% of GDP in 2021.  Since many businesses will also struggle to offset the labour shortage with automation due to extensive upfront costs and time delays in implementation, they will have to raise salaries in order to retain their workers.  Companies will therefore raise the price of their products to offset these expenses, which will result in cost-push inflation.  Some firms will be unwilling to pass down costs onto consumers, as this would diminish their competitiveness, and may instead prefer to manufacture elsewhere. The majority have opted for the latter; a survey conducted by Gartner revealed that a third of corporations, including Apple and Samsung, plan on moving operations to neighboring countries by 2023.  Although other factors, such as the Sino-American tariff war and China’s zero-COVID policy, have accelerated this trend, respondents listed soaring labour costs (for example, wages increased by 9.7% in 2020-1) as their second most important reason for moving. 

Secondly, lower fertility rates will result in the overall population becoming unhealthier, since they will increase the share of older people in society.  This will lead to more demand for healthcare; the average person over 65 spends 7.25 times more on their wellbeing than someone under 25 does.  On the one hand, this will negatively affect the CCP as they will have to prioritise improving health services over stimulating economic growth through infrastructure and education.  On the other hand, the onus of looking after senior citizens will also fall on the general population.  This may leave families cash strapped – 24% of Chinese citizens already spend above a tenth of their income on healthcare, compared to 4% of Americans.  Moreover, young people may sacrifice work to take care of older relatives, with over two-thirds of them currently struggling to balance these two duties, according to a study conducted by China Youth Daily.  This burden will be exacerbated by the government’s inability to deal with this issue; the state’s pension system only covers 70.7% of China’s aged population and in 2014, less than 3% of them could afford to go to a nursing home.  Even if the CCP rectified this, over 70% of children would prefer to look after their parents themselves, as this falls in line with traditional Chinese values.

Falling fertility rates have also been accompanied by an increase in the number of only children.  Interestingly, they tend to possess more negative personality traits than children with siblings, according to a study by Xin Meng of the Australian National University in Canberra.  Since only children are usually looked after by six doting parents and grandparents, they become used to being the centre of attention and having everything that they want.  When these only children become adults, they might demand higher wages and less overtime as well, which would decrease businesses’ profit margins.  In addition, they may avoid harsh working conditions altogether by choose to work in industries with better ones, which would induce a labour shortage in sectors such as manufacturing.  Furthermore, greater attention from relatives might put more pressure on children to excel, with the resulting long-term neurosis leading to lower productivity and more spending on treatment clinics; the World Health Organisation states that 54 million Chinese people have depression, and an additional 41 million have anxiety disorders. The fact that parents only need to look after one child means that they are less likely to stress the need for cooperation with others, and this may mean that only children collaborate poorly with their co-workers.  These traits have become so widespread that health services in large cities have introduced therapy programs specifically targeted to reduce their prevalence.  As a result, the CCP’s budget has been stretched further; in Guangzhou, a three-month program designed to cure the little emperor syndrome costs the government $4,000 per child.

Before considering how to raise fertility rates in China, it is worth examining two misguided ideas that might come to mind.  Abolishing the current three-child policy would be futile, because although this would allow parents to have unlimited numbers of offspring, many do not want more than three children, with slightly under half of young Chinese people willing to have even one child.  In addition, according to the China Population Association, those who do want larger families primarily live in the western parts of the country, and are already trapped in poverty since they would be geographically barred from accessing manufacturing jobs, which are usually situated in coastal cities.  Hence, an increase in these populations would put considerable pressure on the Chinese welfare state.  Secondly, some might suggest that the CCP should encourage immigration, since foreign migrants in China may have comparatively higher fertility rates than nationals do (only the latter were told during the 1980s-2010s that having one child was a virtue).  However, increasing immigration is easier said than done.  Structural barriers, such as the country’s largely monolingual population and the prospect of living in a harsh authoritarian state, would overshadow any incentives the CCP may provide.  In short, there is a reason why migrants make up a mere 0.07% of China’s population.

How, then, can China solve its population crisis?  It must first convince more people to get married.  The skewed sex ratio (there are 106.3 males for every 100 females, compared with a global proportion of 101.8 to 100 respectively) and the overrepresentation of the sexes in different industries mean that it is challenging to find a partner; the CCP could organise more in-person events for young people to meet.  In addition, it could host similar introductions online, which would be more popular than unofficial matchmaking websites, which have few regulations to protect users from catfishing.  Poorer men are also often deterred from getting married by the expectation that they need to buy property before proposing.  Therefore, the government could take steps to lower house prices, primarily by reversing policies such as the ‘three red lines’ (these limit the amount of money that real estate developers can borrow, thus reducing the supply of homes and driving up house prices).  Furthermore, Chinese women in particular are sceptical of tying the knot, with over 41% of women not minding remaining single, compared to 20% of men.  Since the main reason for this is fear of domestic abuse, the party could use education to denounce the stigmatisation of women who speak out against their abusers and to reject the Confucian view that conjugal violence is a symbol of ‘patriarchal power’.  Furthermore, the party could urge the police to take domestic abuse cases seriously, as it tends to dismiss them as ‘family matters’ and often refuse to intervene.  If these fail, the CCP could allow unmarried women, in addition to the 45 million infertile women, to have children by lifting bans on assistive reproductive technology (including IVF and egg freezing), which it currently deems unethical.

However, raising the marriage rate is only half the solution; the CCP must also make it easier for couples to have children.  85% of mothers cannot afford to raise another child since they cost a staggering 6.9 times more than the GDP per capita, a larger ratio than that in developed countries such as the US, Germany, and France.  This is because parents frequently spend extra tuition to keep their kids competitive in school, and the welfare state’s inadequacy makes it necessary for many of them to pay for private childcare.  Subsidising parenting through tax reductions and cash incentives will alleviate this burden, particularly for the poorest families.  Such a policy could be cheaper than it sounds, because even a small reward would make prospective parents more confident that childrearing is not a financially dangerous undertaking, especially if accompanied by an extensive propaganda campaign.  For example, when a similar Japanese scheme was implemented in 2014, it raised the total birth rate from 1.42 to 1.46 within a year, despite only subsidising ¥15,000 of the ¥260,000 that it costs monthly to raise a child.  Women are also dissuaded from childbearing because of pressure from employers, with 51% worrying that having children may prevent them from being hired, and that it may lead to income loss, demotion and even dismissal.  To solve this, the CCP could improve enforcement of anti-discrimination laws and impose larger penalties on offending companies, who currently pay a mere few thousand yuan to their victims.  Moreover, when employees have children, the government could cover managers’ expenses associated with hiring replacement workers and parental leave, and it could mitigate them by subsidising the construction of more childcare centres, since these costs are a major driver of pregnancy-based discrimination.

All of these solutions may seem expensive, but China can afford to borrow to finance them as its debt-to-GDP ratio was only 72% in 2021, compared to an OECD average of 90%.  In addition, increasing fertility rates would pay for itself many times over as having a large population directly contributes to the impetus behind the country’s astonishing economic growth.  If China wants to be the global ‘number one’, being the first country to remedy a declining population would be a good start.