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Why China’s three-child policy is unlikely to improve the gloomy long-term economic outlook

  • The latest census has revealed a significant slowdown in the population growth rate, fertility rate and number of migrant workers
  • Given that productivity growth has also been declining, the prospects for the economy remain grim

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A woman carries a girl as they visit a peony garden in Heze, in east China’s Shandong province, on April 8. In 2020, the country saw only 12 million births, the lowest number in at least six decades. Photo: Xinhua
China’s once-in-a-decade census report, released in mid-May, shows a further slowdown in the country’s population growth. Between 2010 and 2020, the population grew at an average of 0.53 per cent annually, the slowest rate in any decade since China’s first census in 1953.
One of the reasons for the significant slowdown is the former one-child policy, which aimed to prevent the population from growing too fast. However, around 10 years ago, when the last census report was published, Beijing realised that this sharp slowdown would cause significant economic and social problems.
Therefore, the authorities gradually relaxed the policy and shifted to a two-child policy in 2015. This week, the Politburo, China’s top decision-making body, announced that a three-child policy will be adopted during the 14th five-year plan, clearly reflecting the urgent need to address these demographic challenges.

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China 2020 census records slowest population growth in decades

China 2020 census records slowest population growth in decades

However, it remains open to question whether the three-child policy will be effective. After the introduction of the two-child policy, the number of births did increase, slightly, in 2016 and 2017. However, this was only a temporary phenomenon, as the number later fell significantly.

In 2020, only 12 million babies were born in China, the lowest total in six decades. Given the minuscule effect of the initial relaxation of birth controls, it questionable whether the complete lifting of restrictions, which is now under discussion, can alter the unfavourable trend in the birth rate in the long term.

China’s total fertility rate – the average number of children born to women during their reproductive years – has dropped to the 1.3-1.7 range in the past decade, far below the 2.1 level that would be needed to sustain the current population level in the medium to long term.

In the meantime, there have been online discussions on the concept of “neijua”, or “turning inwards” in China, which is seen to somehow explain the country’s low birth rate. High property prices, heavy workload and intense competition for educational resources have made the young generation reluctant to have children.
While the government has been attempting to contain property prices and optimise schooling resources over the past few years, there is little sign that young people are more enthusiastic about becoming parents.
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