The Herman Trend Alert
January 18, 2017
Unintended Demographic Consequences
In an attempt to limit population growth in China in 1980, the government instituted a strict one-child "policy" throughout the country. For years, Chinese couples were not allowed to have more than one child and doing so had dire consequences---legal, economic, and social. Couples making the difficult choice to have more than one child were penalized financially, shunned socially, and sometimes even jailed.
China's long-term demographic shift
It takes a birth rate of 2.1 for a population to sustain itself. And in China, due to the valuing of boys over girls, even the 2.1 rate would not be adequate. In 2016, the official government statistics bureau of China published data from its mini-census. That data showed China's total fertility rate (the number of children a woman expects to have in her lifetime) had fallen to 1.05---one of the lowest rates in the world.
Population down by 13.1 percent between 2012 and 2015
The number of children born in China in 2015 was 11.3 million, down from more than 13 million in 2012. This 13.1 percent decline represents a continuing trend of a decrease in the number of women of child-bearing age.
Relaxation of China's one-child policy won't help a lot
To increase the number of female babies in China, the country made the decision to relax its one-child policy. Unfortunately, that decision will not make a huge difference. Under the previous policy, in spite of the hardships afforded to couples making the difficult decision to have multiple children, almost half of all births were second or third children.
China's extensive family-planning infrastructure
China's existing family-planning infrastructure employs hundreds of thousands of people, continuing to pursue and fine those couples it believes have too many children. Interestingly, this trend of fewer children for parents "to spend money on, to be educated, and to become future consumers" has resulted in slowing economic growth for the country.
Declining birth rates have meant closing of schools, too
Especially in rural areas, this decline in the population, along with urban migration, have translated to the closing of more than 50 percent of the schools as well as a greater strain on urban schools. As the impact of this population decline continues, expect to see a further slowing of the economy.
What China can expect
Instituted country-wide 37 years ago, China's successful attempt to slow the growth of its population has clearly had a number of unintended consequences: a critical shortage of young women and a significant slowing of its economic growth. In spite of the importation of young women from India and other countries and government intervention, we do not see an immediate, significant change in either area.
Tourism can help, but. . .
Though tourism to China will continue to grow rapidly, that growth is hampered in large cities like Beijing by the lack of English-speaking skills. The hospitality industry in China would do well to launch a major foreign language initiative in this country, looking at the major languages spoken by its tourists.
Special thanks to McKinsey and Company for their recent report on "Employment and Growth". Read the full report at http://www.mckinsey.com/global-themes/employment-and-growth/can-long-term-global-growth-be-saved.
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