China Announces Three-child Policy As Ageing Threatens Its Economy

China has reversed its law that allowed for only two children, allowing women to bear up to three children for the first time since 1980. The three-child policy is aimed to cushion the effects of the country’s ageing population that is threatening its workforce and economy.

The decision was announced after a Communist Party Politburo meeting chaired by President Xi Jinping, a meeting in which other proposals such as postponing the retirement age and improving child care services and maternity leave were also discussed, SCMP reported.

“Birth policies will be further improved. A policy that allows a couple to have three children will be introduced with supporting measures. This will improve the population structure of China,” a statement from the Communist Party said after the meeting.

In 2015, the Chinese government completely annulled its one-child policy, allowing women to have two children. The policy started in 2013 with the government allowing only people who were products of the one-child policy to have two children.

Births in China have fallen for four consecutive years, including in 2020, when the number of babies born dropped to the lowest since the Mao era. The country’s total fertility rate — an estimate of the number of children born over a woman’s lifetime — now stands at 1.3, well below the replacement rate of 2.1, raising the possibility of a shrinking population over time.

The one child-policy was enacted in 1980 in an attempt to control China’s exploding population. But the decision apparently did not take the long term economic impact into consideration. With China’s Communist government, opening the country’s labor market for immigrants like other countries caught in the ageing population crisis is not on the table. At the same time, the government has to maintain a vibrant workforce to keep its economy in its global leading position.

Critics of the one-child policy have centered their concern on the Communist Party’s push to control people’s reproductive choices, a policy seen as part of Chinese government’s long-held tradition of human rights violation.

With China’s industrial strategy, which has helped it change its economic story shrinking, the Communist Party under Xi Jin Ping is being forced to reckon with a labor pool under threat. Xi has resisted the call to remove any restriction on child bearing, and now, moving the number to three children seems to be a sign of acceptance that the policy has jeopardized the economic future of China.

However, critics believe the three-child policy is not enough, that China needs liberal child-bearing policy.

“Opening it up to three children is far from enough,” said Huang Wenzheng, a demography expert with the Center for China and Globalization, a Beijing-based research center. “It should be fully liberalized, and giving birth should be strongly encouraged.”

“This should be regarded as a crisis for the survival of the Chinese nation, even beyond the pandemic and other environmental issues,” Mr. Huang added. “There should never have been a birth restriction policy in the first place. So it’s not a question of whether this is too late.”

While the announcement offers a little hope of a vibrant median age future for China, many concerns are rising. The rising cost of living that has made it more expensive to raise children now and the growing number of families who have come in terms with the one or two child policies, are posing a challenge to the implementation of the three-child policy. Some don’t want to have children at all.

Though the government pledged to encourage acceptance of the new policy with improved more child-friendly benefits like maternity leave, and to “protect the legitimate rights and interests of women in employment,” who usually get stigmatized for having more children, many still doubt that it will change the situation.

The party also said it would increase funding to expand services for the country’s retirees. In 2020, the number of people age 60 and above in China stood at 264 million, accounting for about 18.7 percent of the population. That figure is set to grow to more than 300 million people, or about one-fifth of the population, by 2025, according to the government.

While the new measures targeted at promoting the policy will go a long way, it has created a huge vacuum of age disparity in the labor pool that needs to be filled.

“This policy would have little impact on the trend of the declining labor force in the next 20 years. Hence we expect the government will initiate a policy to delay retirement to address this issue,” Zhiwei Zhang, chief economist at Pinpoint Asset Management said.

The NBS said Chinese mothers gave birth to 12 million babies last year, down from 14.65 million in 2019, marking an 18 per cent decline year on year. There is concern that recent data may be more troubling, prompting the government to make the new rule.

“The decision makers have probably realized that the population situation is relatively severe,” said He Yafu, an independent demographer based in the southern Chinese city of Zhanjiang. “But merely opening up the policy to three children and not encouraging births as a whole, I don’t think there will be a significant increase in the fertility rate. Many people don’t want to have a second child, let alone a third child.”

The one-child policy was in force for over three decades in China, with measures of penalties for women who had more than one child. To compound its present predicament, there was a cultural preference for boys, forcing women sometimes to abort the girl-child. Hence, the policy led to men outnumbering women by 34.9 million in 2020.

The decline in birth rate is as a result of China having more men than women. The Chinese Academy of Social Sciences said the number of women of childbearing-age peaked in 2011 and has been falling since.

As a result, China has been ageing much faster than other low- and middle-income countries with implications that may mar its economic future.