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CHANGING DEMOGRAPHIC TRENDS IN CHINA Hamayoun Khan * Introduction China has been the world’s most populous country for centuries and today makes up twenty per cent of the world’s population. China’s large population, turbulent demographic history, and potentially great future have captured the world’s attention. Its growing economic strength, together with its demographic might, guarantee that China will stay in the limelight for a long time to come. The country has witnessed major political, social, and economic changes over the past half century, but many of the issues that Chinese society faces today are also closely connected to past demographic changes, which I will be discussing in the ensuing paragraphs. Because of the rapid and extensive fertility declines in China over the past thirty years, the country’s population growth rate has slowed considerably.1 It was 1.3 billion in the early 2000s, and is projected to grow by another 100 million by 2050. Meanwhile India, with its higher fertility levels, is forecasted to move ahead of China in total population size by 2035.2 In China, because of rugged mountains in the west and vast desert areas in central China, the population is concentrated within a surprisingly small area. Rapid population growth during the twentieth century helped shape the society in myriad ways, as China concurrently struggled with the breakdown of its dynastic structure, world wars, civil wars, and the founding of a new nation. Population Dynamics The dynamics of populations in general and ageing populations in particular have become global economic issues. The world stands on the threshold of a demographic revolution–global ageing; in the coming decades, it will subject nations around the world to extraordinary economic, social, and political challenges. The segment of the global population that is age 60 and older is rising sharply, both in percentage terms and absolute numbers, with the expectation that it will surpass one billion within two decades.3 Moreover, the population aged 80 and over is projected to increase at an annual rate of 3.4 per cent from 2000 to 2050, corresponding to an increase from one per cent to four per cent of the global population.4 China’s population has undergone massive change since the founding of the People’s Republic of China (PRC) in 1949. When the Chinese Communists formed the new government, there were roughly half a billion Chinese. Millions of peasants lived in abject poverty, subject to unstable political conditions. The Chinese had endured a civil war, a war with Japan, serious flooding, famine, and social and political turmoil. China’s new leaders were determined to reduce poverty and stabilize the political situation. The founders of the PRC implemented state control of the economy as well as all means of production, in an effort to reduce poverty and expand access to the country’s resources. Mortality and fertility rates declines after 1950 were remarkable and swift.5 Some of the demographic changes can be attributed to the transition from the social, political, and economic unrest of the early twentieth century to relative stability. But much of the mortality and fertility rate change emanated from government actions that directly or indirectly initiated demographic change. China’s mortality rate has declined dramatically over the past fifty years, especially in the early years of the People’s Republic. The official death rate in 1953 was 14 deaths per 1,000 people. The official death rate had dropped below 7 by 1970, and below 6 by 2000.6 China’s mortality rate fell in part due to redistribution of land and other resources to help ensure access by even the poorest citizens. The government at that time also began to develop massive public health programmes. Early programmes focused on relatively inexpensive goals and campaigns, such as local environmental clean-up programmes and training programmes for local health personnel, which contributed to lower mortality rates. China’s mortality rate decline was interrupted at several points by temporary but often severe disruptions tied to political, economic, and social changes. The most notable was the “Great Leap Forward”. In 1958, the Chinese government launched the Great Leap Forward: a massive effort to rapidly increase agricultural and industrial production. The programme was a colossal failure7 and, ironically, caused one of the worst famines in human history. Demographers and others, who pieced together the available information, estimated that more than 30 million people died between 1958 and 1961 as a result of the Great Leap Forward.8 Infants were especially vulnerable. Infant mortality rates spiked in 1958 and then in 1961.9 (Table 1) Adult mortality surged in 1960. As the country recovered, mortality levels declined and life expectancy at birth increased from 35 years in 1949 to 72 years in 2001.10 Table 1
Source: China Statistical Yearbook (various years), Beijing. Expanding Health Care While much of the decline in the mortality rates can be attributed to rising living standards, the extensive public health system, underwritten and organized by the government, also helped reduce illness and death. “Barefoot doctors”11 brought preventive and basic health care to millions of rural Chinese. Immunization programmes were widespread: by 1990, 98 per cent of infants had been immunized against polio and measles.12 The PRC’s socialist government also financed all health services and made health care affordable for all citizens. The 1980s economic reforms pushed China toward a market economy and changed China’s health care system in many ways that may widen mortality gaps among population groups. In the PRC’s early years, universal access to health care was a top priority. The Ministry of Health, together with its counterparts in the provincial health bureaus, oversees the health needs of the Chinese population.13 An emphasis on public health and preventive treatment had characterized health policy since the early 1950s. At that time, the party started the Patriotic Health Campaign, which was aimed at improving sanitation and hygiene, as well as attacking several diseases. This has shown significant results, as diseases like cholera, typhoid, and scarlet fever have been nearly eradicated. Before economic reform started in 1978, the communes in rural China provided health care through a three-tier system that was managed and financed locally. In the first tier, the part-time barefoot doctors in health clinics provided preventive and primary care. For more serious illnesses, they referred patients to the second tier: commune health centres, which might have 10 to 30 beds and an outpatient clinic, serving a population of 10,000 to 25,000, and which were staffed by junior doctors. The most seriously ill patients were referred by the commune health centres to the third tier: county hospitals staffed by senior doctors. The “co-operative medical system” (CMS) that organized the barefoot doctors and provided other medical services to the rural population was part of the commune system and was financed by the communes’ welfare funds. Thus, the CMS served the dual role of a supplier and a collector of insurance funds for the farmers to pay for the services. Health care can be adequately supplied in a planned economy, if the planning authority, as represented by the commune leaders in the present case, controls all resources to deliver healthcare, including capital facilities, personnel, and medical supplies.14 The shift towards a market-oriented system since the early 1980s has meant the demise of guaranteed access to health care. Poor people may not be able to pay for health care, and rural residents may not have access to health services, making those groups particularly vulnerable. Regional, gender, and other differences in mortality are increasingly visible. Between the 1960s and the 1980s, China experienced one of the most rapid and impressive declines in fertility rates ever recorded in a national population.15 In just fifteen years, the total fertility rate (TFR: the number of children a woman would have, assuming current age-specific birth rates) fell from around six children per woman to just over two children per woman.16 Table 2 People’s Republic of China Fertility Rate, 1949-1999
Decline in Fertility Fertility began to fluctuate in the 1950s and 1960s; however, after the 1960s, it has been in constant decline, probably because the Chinese government began to pay attention to urban fertility rates, and because couples began to want fewer children.17 Fertility rate declines accelerated in the 1970s and early 1980s, influenced by the government’s birth planning policies that began in the 1970s and had became more restrictive by 1980. Although China has made the transition from high to low birth and death rates, each year the number of births exceeds the number of deaths by about 9 million. This is due to population momentum: the very large group of women, now in their peak childbearing years, results in many births, without necessarily raising the total fertility rate. Currently, the TFR is 1.82 births per woman.18 In 2001, the average was estimated at 1.98 in rural areas and 1.22 in urban areas.19 Birth Planning Policies China’s fertility decline has been supported by some of the world’s most restrictive national birth planning policies. The most strict and controversial policy (the “one-child campaign”) began in 1979, but the Chinese government was involved in birth planning, since the 1950s. In the early days of the PRC, the government argued that China needed a large population to bolster its political strength and provide labour for economic development. In the mid-1950s, it feared that excessive population growth would hinder economic development. Coupled with a desire to improve maternal and child health, this led the government to reverse its position and look for ways to control population growth. The first birth planning campaign, in the 1950s, extolled fertility control in the name of maternal and infant well-being.20 Between 1962 and 1966, the government launched its second family planning campaign, which sought to lower fertility rates, especially in rural areas. Fertility rates in some urban areas declined remarkably during this period, but the campaign had little effect on most rural areas, which were ill-equipped to provide family planning services.21 A period of rapid growth began again since then, as shown in Figure 1.
Source: China Statistical Year Book 2003 The third population campaign–wan, xi, shao (“later, longer, fewer”)–also emphasized later marriage, longer intervals between births, and fewer births. It began in 1971 and continued until the end of the decade. The campaign had far wider geographic and demographic impacts than any earlier efforts. As a result, the population growth rate declined steadily, in spite of the social and political chaos during this period. The campaign was the first to establish national and provincial level targets for births and–at least in principle–was the basis for targets at local levels. At the start of the campaign, couples were discouraged from having more than two children; by the end of the campaign, in the late 1970s, couples were encouraged to stop after one child. By the end of the 1970s, the government had begun to believe that population control would require extreme measures.22 A new understanding of the demographic consequences of large birth groups, such groups which would have an echo effect for generations to come, fuelling population growth even if fertility rates fell immediately to replacement levels, compelled the Chinese government to establish population control measures. Furthermore, the new regime of Deng Xiaoping, staked its legitimacy on achieving prosperity by the end of the twentieth century–a goal that could be derailed by excessive population growth. Having seen rampant population growth eat up economic gains in the past, China’s leaders were convinced that their economic project would fail if it could not staunch the growth of the population. China’s one child family policy, which was first announced in 1979, has remained in place, despite the extraordinary political and social changes that have occurred over the past two decades. One Child Policy Details of what the one child policy involved and how it was to be implemented have varied at different times. The essential elements are clear: the aim was to curtail population growth, perhaps to 1.1 billion and certainly to 1.2 billion, by the year 2000.23 It was hoped that third and higher order births could be eliminated and that about thirty per cent of couples might agree to forego having a second child.24 The ideal of a one-child family implied that the majority would probably never meet it. It was argued that the sacrifice of second or third children was necessary for the sake of future generations. People were to be encouraged to have only one child, through a package of financial and other incentives, such as preferential access to housing, schools, and health services. Discouragement of larger families included financial levies on each additional child and sanctions, which ranged from social pressure to curtailed career prospects for those in government jobs. Birth planning policies have changed significantly since the start of the one-child campaign. At the end of the 1980s, new data indicated that fertility levels were still unacceptably high; hence, policies were again tightened. Under this third phase of China’s birth policies, local efforts were strengthened through changes in incentives and disincentives, the organization of family planning work, and the allocation of resources. By 1993, the director of the State Family Planning Commission declared that these new efforts and methods had succeeded and that fertility rates were again under control. The fourth stage, initiated in 2000 and 2001, marked another shift away from the more stringent measures. While adhering to previous birth planning goals, the new approach authorizes more client-centred services. Nevertheless, while these recent measures “stress citizens’ rights…those rights are mostly to receive services, not to reject them”.25 Chinese citizens are still obliged to strictly limit the number of children they bear. In some of the largest and most advanced cities like Shanghai, sizeable proportions of couples had already chosen to have only one child. Both adults worked full-time with long hours; the housing allocation was only 3.6 metres2 per person in 1977.26 Also, without conveniences such as refrigerators, tasks such as shopping and cooking, were time-consuming daily efforts. In most families, at least one member would be employed in the state sector and susceptible to government direction. As a result, it was not long before ninety per cent of couples in urban areas were persuaded to restrict their families to a single child.27 Rural families, however, were more difficult to convince. Peasants with limited savings and without pensions needed children to support them in their old age. As married daughters moved into their husband’s families, a son was essential–and preferably more than one. Infant mortality rates had fallen greatly, but in 1980 it was still around 53 per 1000 live births nationally and higher than that in rural areas.28 Years of political upheaval had left many peasants cynical about government policies and their likely duration; it also left them adept at avoiding unpopular prescriptions. Local authorities were forced to rely on fines for higher order births. They also turned to stringent birth control campaigns, which, in the policy’s earlier years, resulted in considerable numbers of women being bullied into abortions and sterilization. Village-level family planning workers were caught between the state’s demands and the determination of their friends and neighbours. Gradually, villagers developed a process of negotiation and compromise,29 which allowed a degree of flexibility within the policy. As a result, irrespective of the particular directives at any given time, the proportion of women with one child, who went on to have a second, fell only to ninety per cent by 1990.30 Ageing Population China is slowing undergoing a surprising demographic change. It is still a young society, as in 2004, the elderly (defined in China as adults aged 60 and over) made up just eleven per cent of the population. By 2040, however, the UN projects that the share will rise to twenty-eight per cent, a larger share of elderly people than it projects for the United States.31 In absolute numbers, the magnitude of China’s coming age wave is staggering. By 2040, assuming current demographic trends continue, there will be 397 million Chinese elders, which is more than the total current population of France, Germany, Italy, Japan, and the United Kingdom combined.32 With the number of elderly growing as a result of rising life expectancy, China’s low birth rate has pushed the share of those aged 65 and above from 4.9 per cent of the total population to 7.7 per cent.33 China’s government finally appears to be acknow-ledging the urgent challenges presented by the country’s ageing population. On 12 December 2006, it released a cabinet-level White Paper on the problem, the first of its kind, titled “The Development of China’s Undertakings for the Aged”, released by the China National Committee on Ageing, in an effort to grapple with the prospect of rising social security and healthcare costs, a tightening labour market, and other potential obstacles to continued rapid economic growth.34 China’s demographic trends hold several adverse impli-cations for its economy. With a rapidly ageing population and a shrinking workforce, tax revenue will contract, while expenditure on pensions and health care will expand, undermining the fiscal position. Various estimates by private-sector economists and World Bank officials suggest that the government’s accumulated “net implicit pension debt” could balloon to 75 to110 per cent of GDP.35 Moreover, the decline in the working-age group would squeeze labour supply, fuelling wage growth and eroding the country’s economic competitiveness. Already, in the Yangtze and Pearl River Deltas, where manufacturing activity is the densest, labour shortages have appeared. In 2004, for example, Guangdong Province had to raise the mandatory minimum wage by as much as seventeen per cent to attract workers from other regions. To hire and retain skilled workers, many foreign-invested enterprises routinely pay above the minimum wage.36 China, the world’s most populous country, is now feeling the pressure of the ageing population. This problem can no longer be ignored; otherwise, the ageing population will cast a huge shadow over China’s economic development in the coming decades. The ageing problem exists in many countries other than China, but most developed countries have an annual GDP of between US$5,000 and US$10,000 for each of its citizens. In contrast, China only had an annual GDP of US $1,700 per capita in 2006: it will experience an ageing population before it becomes affluent.37 To make things more complicated for China, the country has not established a pension plan covering all of its citizens. The current pension plan only includes employees in state-owned or collectively-owned enterprises in cities. Civil servants have an independent pension plan. About ten per cent38 of rural residents have set up their own small-scale pension plans. The rest of China’s rural citizens–the majority of them–are excluded from any basic pension insurance. Currently, only twenty-five per cent39 of the working-age population is covered by any kind of old-age pension plan. Without proper handling, the ageing problem could trigger dire consequences. As the number of senior citizens increases, the government will have to spend more on pensions: expenditure on retirement pensions increased by 37.4 times from 1982 to 2000.40 Medical care and daily nursing for senior citizens will also see a huge increase in demand, which should be taken care of within the community. Senior citizens also have needs in terms of entertainment, community participation, and other forms of recreation. Under the market economy, senior citizens will face a larger risk of being exposed to poverty, and the authorities will be called on to deal with this problem. Some experts claimed China would have a 15-year golden period from this point on, because there are ten million people of working age, making the country’s population age structure fit for harvesting a demographic dividend. A real solution for cushioning the shock on economic growth posed by the ageing population is to make good use of resources and time at this moment to construct a social security system, covering all citizens without difference. Sex Ratio There is another striking perspective of China’s changing demographic trend. The sex ratio trend in China may well pose a far bigger problem for the rest of the world than the ageing population trend. The spread of sex selection is giving rise to a generation of restless young men who will not find mates. History, biology, and sociology all suggest that these “surplus males” may generate high levels of crime and social disorder. In 1993 and 1994, more than 121 boys were born in China for every 100 baby girls.41 The normal ratio at birth is around 105;42 for reasons debated among biologists, humans seem naturally to churn out slightly more boys than girls. The shortage of females is not going to self-correct because the females and their parents cannot leverage the scarcity of the females for self-benefit and so there is no market incentive to have more female children. China’s gender ratio for newborn babies in 2005 was 118 boys for 100 girls, compared with 110:100 in 2000. In some regions, the figure has reached 130 newborn boys for every 100 girls.43 Several studies have hypothesized female infanticide, sex-selective abortion, the under-reporting of female births, or female adoption as plausible immediate causes for the rise in the sex ratio at birth in China. It has often been asserted that the phenomenon is a result of the government’s adoption in 1980 of a population policy advocating one child per couple. As mentioned earlier, China’s family planning policy, formulated in the early 1970s, encouraged late marriages and late child-bearing, and limited most urban couples to one child and most rural couples to two. While the policy is credited with preventing 400 million new births, the Chinese authorities warn the country is still facing an “unprecedented” situation. The Central Committee of the Communist Party of China and the State Council44 said the key and difficult area is the country’s rural regions, where the social security network is underdeveloped and people’s traditional preference for male heirs has not changed. They promised to improve family planning services in rural areas and will offer more assistance to girl-only families.45 The Chinese government has also pledged to keep the mainland population under 1.36 billion by 2010 and under 1.45 billion by 2020.46 Over the coming decades, China’s overall population will increase by eight to 10 million a year,47 bringing unprecedented challenges to the country’s social and economic development. China’s overall population, along with its working population and its aging population, will peak in the first half of the twenty-first century. Effects of the Demographic Trends Substantial imperfections in labour and capital markets are preventing a uni-directional and significant relation between demographics and economic growth at this point in China’s economic evolution. The bottlenecks in the Chinese labour market are partially a leftover from the pre-1978 period and partially a consequence of the transition to a market system. China’s hukou structure, which inhibits the free movement of labour between regions, along with widespread layoffs from restructuring state-owned enterprises, has created a great many regional bottlenecks in the Chinese labour market, as evidenced by regional wage differences that are simply too large to be fully explained by expected geographic differences in the cost of living. As a result of these bottlenecks, demographic changes that add to the labour supply are likely to exacerbate long-term unemployment in many regions, regardless of short-term regional and/or national economic conditions. Thus, increments to the labour pool will not have a positive impact on national economic growth and might very well have a negative impact. Economic Growth In addition to labour force changes, demographics impact economic growth through the stock of savings. As the working-age population swells, savings rates normally increase. As ageing shrinks the ratio of the working-age population to the total population, savings rates normally decrease. But some structural and policy-related difficulties in the Chinese banking system have resulted in weakness and inefficiency. Thus, increased savings do not necessarily get routed to productive, growth-generating investment projects. China is not yet at the point where population dynamics matter a great deal to economic growth. In fact, since economic growth and development have been so uneven, in the sense of favouring the eastern regions, there are many inland areas which are deprived of the benefits of stronger economic growth. When it does come to the underdeveloped regions, it will influence household child-rearing decisions and thus further impact overall population growth. Some of the benefits of economic development, which include a decline in infant mortality along with increased opportunities for women to use their productive time for activities apart from child-rearing, create an incentive for families to have fewer children. Further, savings rates will likely decline as the aged population increases as a share of the total, since the working-age group tends to normally exhibit the greatest savings propensity. Potentially rising wages and declining savings rates will create more of a consumer-led economy and should lessen China’s dependence on fixed asset investment as a source of economic growth. Over the next decade or so, if the path of rapid national economic development continues and if policies allow for the full maturation of labour and capital markets, China’s population parameters will have a uni-directional and substantial impact on economic growth. At that point, the most pressing demographic issue from the standpoints of national growth, regional development, and international competitiveness will be labour supply. Declining national labour supply, particularly for the urban areas, may very well be a short-term plus, given China’s pool of long-term unemployed and given the social costs of absorbing rural migrants into urban areas. But the impact of a dwindling labour supply reaches into other areas that Chinese policy-makers need to consider. Most importantly, the dwindling supply of labour, all other things being constant, will put upward pressure on wages. Skilled wage growth is already set for acceleration for a number of reasons. Conclusion China has experienced dramatic economic growth and success since moving toward a market economy and opening up to international trade, but the changes have also brought enormous challenges, including growing social and economic inequality, environmental damage, and labour migration. The sharp decline in Chinese fertility, combined with other demographic shifts, has added to the challenges. Limiting population growth may have a positive effect on the environment by reducing the number of people vying for water, land, and air, but because fertility has fallen just as economic growth is rising, most of the positive effects from slower population growth are masked by the enormous impact of new industry on the environment. Family structures have also been affected by changes in fertility, marriage, and life expectancies, leading to another set of complications. People are living longer, and the growing proportion of elderly in China is beginning to strain both national and family resources. It is very difficult to predict exactly what will happen in China in the next fifty years, but the effects of the dramatic changes on China’s fertility, health, and government in the twentieth century will, without a doubt, continue to ripple through the society for the foreseeable future. China’s recent history shows how population change is an integral part of a country’s experience, both affecting and subject to a variety of factors. Given China’s enormous political, economic, and demographic importance to the world, the country’s demographic future will be of interest to all of us. |
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* Mr. Hamayoun Khan is a Research Fellow at the Institute of Strategic Studies, Islamabad.
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