China’s major policy decision – to allow couples to have three children– is unlikely to bear fruit in the short to medium term.
Analysts on condition of anonymity said that most Chinese couples are not keen on having three children, due to rising costs, lifestyle changes and other socio-economic factors. The world’s most populated country, is staring at a rapidly ageing population which is not only leading to labour shortages but also denting domestic consumption.
China implemented the one-child policy in 1979, as a measure to control population growth. The aim of the controversial policy was to ensure that population growth did not become a burden on the country, which prioritised economic growth and food supply. Though the policy, put in place by Chinese leader Deng Xiaoping, officially ended in 2015, many couples continue to opt for just one child.
According to S&P Global China’s total consumption — a combination of household and government spending — acted as a drag on China's economy in 2020 to the tune of negative 0.5 percentage point of GDP. In 2019, consumption made up 3.5 percentage points of the total 6 per cent growth in GDP.
China’s growth has been driven by expenditure so far, especially in the wake of the Covid 19 pandemic. However, economists said that expenditure driven growth alone will not be sustainable. Consumption boost, therefore, is critical.
The S&P report said that China’s growth in 2020 was essentially driven by the old model of investment and net exports, which contributed 2.2 percentage points of GDP growth and 0.7 percentage points, respectively.
“Ageing population is a big challenge—it not leads to labour shortage but also consumption. Purchase of house, cars and other items are primarily driven by the younger consumers. This is also a cause for concern for the Chinese government especially at a time when China is getting more confrontational with other countries and many are already looking at an alternative source of supply chain,” Subhomoy Bhattacharjee, Senior Adjunct Fellow at RIS (Research and Information System for Developing Countries) told India Narrative.
China’s controversial child birth policies
The decision to allow couples to have three children was announced on Monday after President Xi Jinping approved it at a top-level meeting.
In 2016, China replaced the one-child policy and allowed couples to have two children.
“If relaxing the birth policy was effective, the current two-child policy should have proven to be effective too," news agency Reuters quoted Hao Zhou, a senior economist at Commerzbank as saying.
Human rights watchers unhappy
The decision has not augured well with human rights watchers as well.
Amnesty International said governments have no business to regulate child birth.
“Rather than ‘optimizing’ its birth policy, China should instead respect people’s life choices and end any invasive and punitive controls over people’s family planning decisions. Raising the limit from two children to three would bring China no closer to meeting its human rights obligations, head of Amnesty International’s China Team, Joshua Rosenzweig, said in a statement. Rosenzweig also said that everyone, regardless of marital status, should be entitled to sexual and reproductive rights, including whether and when to become pregnant.