China’s Two-Child Policy is Failing

03.24.17

Written by Richard Hokenson 


Although many heralded the increase in Chinese births in 2016 (17.86 million versus 16.55 million in 2015 – see Chart 1) as evidence that the elimination of the one-child policy was working, the reality is that the results were very modest, confirming our view that the change would have only a minor impact. The birth rate barely moved (see Chart 2). Even the Chinese government admits that the outcome fell well short of their expectation of an additional 3 million births.

Provincial results also support the view that there has not been much of a difference. China’s heartland recorded minuscule increases in birth rates. In Jiangxi province, the birth rate ticked up to 13.2 births per 1000 persons in 2015 to 13.4 in 2016. In Shaanxi province, the birth rate rose from 10.1 to 10.2. Crude birth rates in Guangxi and Gansu fell. Both are poor western provinces with a high proportion of ethnic minorities, who were already exempt from the onechild policy, but who are now assimilating the low birth rates of the richer Han majority.

There will be some who will argue that this is not too little but too late because China missed the opportunity to effect this change 7 years ago in order to take advantage of the higher birth rates for women in their early 20’s (see Charts 3 and 4). The number of women aged 20-24 years old peaked 7 years ago (see Chart 5) while the number of women aged 25-29 years old peaked 2 years ago (see Chart 6). Their numbers will continue to shrink which means that all of the growth in the number of women of childbearing age will be concentrated in women 30 years old and over, women whose birth rates have always been low (see Charts 7 to 10).

Earlier elimination of the one-child policy, however would not have resulted in much of a difference as the mediocre outcome for 2016 confirms our long-held view that socioeconomics is the major driver of the low birth rate. Specifically, more women are remaining single (see Charts 11 and 12) and for those who do marry, the divorce rate is skyrocketing (see Chart 13). Since out of wedlock births are extremely rare in China, we expect that the number of births will continue to disappoint.

 

 


Richard Hokenson is a pioneer in the application of demographics to economic and financial market forecasting. 

This update was researched and written by Richard Hokenson, as of March 23 2017