Why China needs more babies to save its aging population

China needs babies to fix a problem of its own creation.

The country’s old one-child policy has created a future labour shortage, with not enough young workers lined up to replace the existing workforce as it retires. And with a fast-growing number of retirees, China’s state-run pension system is facing a burden that threatens to drag it into deficit.

That’s why China needs people to have more babies to address the problem down the road, according to Yong Cai, an associate professor of sociology at the University of North Carolina’s Carolina Population Center.

Cai says China is now paying the price for the one-child policy that helped it avoid out-of-control growth through the last four decades.

“The idea of controlled fertility at the time was not wrong, but it’s been so dramatic that it’s created all kinds of social problems along the way,” Cai told Global News by phone.

Tweet This Click to share quote on Twitter: "The idea of controlled fertility at the time was not wrong, but it's been so dramatic that it's created all kinds of social problems along the way," Cai told Global News by phone.

He says that while the country still has a pension surplus, many provinces are slipping into a pension deficit that will only grow in the coming years.

“The younger labour force is already declining, and that’s partly because the fertility rate has been declining for the last 30 to 40 years,” Cai said.

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That’s where the babies come in. The government has already expanded its decades-old “one-child” policy in an effort to drive up the birth rate and strengthen its future labour force, but lacklustre results have stoked speculation that the allowable family size might grow even further in the near future.

Here’s why China is trying to offset an increasingly grey-haired future.

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Losing the numbers game

The birthrate in China fell last year despite the country allowing all couples to have two children.

There were 17.2 million births in the country last year, down from 17.9 million in 2016, the National Bureau of Statistics reported in January. With almost 1.4 billion people, China has the world’s largest population but it’s aging fast even before reaching its expected peak of 1.45 billion in 2029.

As of 2017, people aged 60 and above accounted for about 16.2 per cent of China’s population, compared to 7.4 per cent in 1950, according to the UN Population Division. The global percentage of people over 60 sits at 12.7 per cent.

North American numbers are much higher than China’s, with 23.5 per cent of Canada’s population over the age of 60 and 21.5 per cent of the United States over that age. 

China’s working-age population fell to its lowest level since 2009 last year and was below a billion for the first time since 2010, according to statistics released in February.

China’s total working-age population, or the number of people aged between 15 and 64, was 998.3 million people last year, compared to 1.0026 billion at the end of 2016, data from the National Bureau of Statistics showed, the biggest decline since the working-age population began falling in 2014.

China’s stock of pension assets accounts for 1.5 per cent of its GDP, according to a 2018 study by Wilson Towers Watson. By comparison, Canada’s assets are 107.8 per cent and the U.S. is at 131.2 per cent.

A December 2017 report by KPMG China blamed this gap for China’s pension troubles, saying that the system “needs to further develop in order to deliver” for its “increasingly grey society.”

“Without the introduction of significant reforms, there will likely be a significant gap that will have to be plugged by the government,” the report says.

Prophetic postage pigs?

The government recently hinted that it might expand the allowable size of families when China Post announced a new stamp depicting a family of five pigs – two parents and three children. The stamp is slated for release in 2019, the Year of the Pig.

Many Chinese took the design as a sign the government is seeking to promote a bigger family size, according to posts on social media.

It wouldn’t be the first time China teased family policy changes with a stamp. The country put out a stamp depicting a family of four monkeys for 2016, the Year of the Monkey, before announcing its new two-child policy.

It’s also possible the new stamps won’t translate into policy change. China Post released a stamp featuring a mother pig with her five piglets in the last Year of the Pig in 2007.

Regardless of whether China manages to boost its fertility rate in 2018, Cai says it’s already headed for a pension crunch that can’t be avoided within the next two decades.

“Even if China could magically reverse its fertility trend today… the decline of the younger labour force for the next 10 to 20 years will continue,” he said.

“It’s not going to reverse the trend anytime soon.”

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— With files from Reuters and The Associated Press