THE SOLO PROGENY POLICY AND THE MIRACLE ECONOMY

The Lessons and Legacies of the Chinese ‘One Child Policy’

Macro-economic policies state and substantiate the cardinal economic principle that population growth fuels economic growth. The reality of both India and China, however, was that explosive population growth resulted in unmanageable consequences in the late seventies. China had an autocratic ruling dispensation and India was a democracy. China was, therefore, in a position to implement dire consequential measures to deal with the population growth. The Communist Party in 1979 implemented a One Child Policy to arrest the population growth in China. The democratic government in India under Indira Gandhi went in for compulsory sterilization resulting in the government losing the support of the population which eventually resulted her losing the support of its Parliament and the people of the country. On the other hand, the Chinese government decreed that a family can have only one child barring some exceptions. This extremely interventionist policy known as One – Child Policy had wide-ranging social, cultural, economic, and demographic effects on society that became both controversial and consequential for the country. A Universal One-Child Policy was imposed by China in 1980 and got it written into the country's Constitution in 1982. This happened after enforcing measures like raising the age of marriage and facilitating measures for more broadly spaced births. In the mid1980s, rural parents were allowed to have a second child if the first was a daughter. It also?allowed exceptions ?for some other groups, including?ethnic minorities .?In 2015, the government raised this limit to?two children , and again in May 2021 to?three . ?In July 2021, it removed all the limits?shortly after implementing financial incentives to encourage individuals to have additional children. The population control programme had wide-ranging social effects, particularly for?Chinese women .?Patriarchal attitudes ?and?a cultural preference for sons ?led to the abandonment of unwanted infant girls some of whom?died ?and others of whom were adopted abroad.?Over time, this skewed the country's?sex ratio ?towards men and created a?generation of "missing women" . ?But the Policy resulted in greater workforce participation by women who would otherwise have been occupied with?childrearing . Some girls in China received greater familial investment in their education. The?Chinese Communist Party ?credits this programme with contributing to?the country's economic ascendancy ?and says that it prevented about 400?million births although some scholars dispute these estimates.?Some have also questioned whether the drop in birth rates were caused more by other factors unrelated to the Policy.?In the West, the Policy had been widely criticised for perceived human rights violations. The One Child Policy has had three important consequences for China's demographics - it reduced the fertility rates, skewed China's gender ratio because people preferred to abort or abandon their female babies that in turn resulting in labour shortages. The One Child Policy was officially discontinued in 2015.

Now let us look at the broad contours of this Policy in some detail. This Policy was introduced during a period when China faced significant population growth and consequent economic challenges and constraints on resources. The government sought to control the population size to promote economic development and improve the living standards of people. The One Child Policy was implemented through a combination of incentives and penalties. Couples who adhered to the Policy received benefits such as housing and education subsidies while those who exceeded the limits faced fines, job losses and in some cases, forced sterilisations. As can be expected, the Policy had a profound impact on China's population structure apart from significantly slowing population growth leading to a demographic shift characterised by an aging population and a gender imbalance due to a cultural preference for male children. The Policy had also some unintended social consequences including a gender imbalance with a higher number of males, the emergence of a "4-2-1" family structure (one child responsible for two parents and four grandparents) and concerns about a shrinking workforce. The One Child Policy faced severe criticisms for its infringement on peoples’ reproductive rights in particular and human rights in general. Forced abortions, sterilisations, and instances of female infanticides occurred in China leading to international condemnation. Recognizing the social and demographic challenges, the Chinese government had to gradually relax the Policy. In 2015, it was officially replaced with a two-child policy, and later a three-child policy was introduced in 2021 reflecting a shift in the government's approach to population control. While the Policy initially contributed to economic growth by curbing population-related pressures in society, it also resulted in a shrinking workforce and potential challenges of having to support an aging population. The government did revise its policies, in part, to address these economic concerns. The Chinese One Child Policy serves as a classic case study on the complexities of population control measures. It highlights the importance of considering human rights, its social implications and its long-term demographic consequences while implementing such policies. The One Child Policy sparked global discussions on population control, reproductive rights, and the role of government intervention. It continues to remain a topic of interest and study in international contexts on the subject. China continues to grapple with demographic challenges including an aging population and a declining birth rate. The effects of the One Child Policy are likely to be felt for years to come and the government is exploring new policies to address these challenges with increased alacrity. The Chinese One Child Policy remains a bold and unprecedented experiment in population control, and it could achieve its initial goal of slowing population growth.? In the process it also generated significant social, cultural, and human rights challenges that continue to shape discussions on population policies globally even today. The Policy's evolution and eventual replacement with more lenient measures underscore the need for a comprehensive and rights-based approach to population management. In the end it turns out that everyone could learn a lesson or two on population control at Chinese expense.

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Now let us look at the economic consequences of the Policy that have been multifaceted with both positive and negative impacts on the country's economy. Here are some key economic consequences to consider in this regard:

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1.?????????????????? Demographic Dividend: In the initial stages the One Child Policy contributed to a demographic dividend. With a smaller number of dependant relatives to the working-age population, China experienced a period of rapid economic growth as a larger share of income could be invested in national development.

2.?????????????????? Aging Population: The Policy has contributed to an aging population. With a declining birth rate and increased life expectancy, China now faces the economic challenges associated with having to support a growing elderly population, including increased healthcare and pension costs.

3.?????????????????? Shifting Dependency Ratio: Initially, the Policy led to a favourable shift in the dependency ratio with a smaller proportion of dependent children. However, the aging population is reversing this trend leading to an increasing dependency ratio as the elderly population grows.

4.?????????????????? Labour Force Contraction: The One-Child Policy resulted in a significant contraction of the labour force. Smaller cohorts of young workers are entering the job market potentially affecting productivity and economic growth.

5.?????????????????? Gender Imbalance: The cultural preference for male children, combined with the One Child Policy led to gender imbalances. The economic consequences include challenges in the marriage markets, potential social unrest, and concerns about the long-term impact on family structures.

6.?????????????????? Changes in Family Structures: ?The "4-2-1" family structure (one child responsible for two parents and four grandparents) places economic and caregiving pressures on the single child. This structure has impacted intergenerational financial support and inheritance patterns.

7.?????????????????? Effects on Industry: A shrinking labour force poses challenges for industries that rely heavily on manual labour. Some sectors face difficulties in finding both skilled and unskilled workers potentially impacting economic sectors like manufacturing.

8.?????????????????? Reversal of Societal Policies: Recognising the economic challenges posed by demographic shifts the Chinese government was forced to phase out the One Child Policy. In 2015, it was replaced with a Two Child Policy and later, a Three Child Policy was introduced in 2021 to encourage higher birth rates.

9.?????????????????? Rising Social Welfare Costs: The aging population places increased demands on social welfare systems including pensions, healthcare, and elderly care services. This strains government budgets and has led to the need for adjustments in social policies.

10.?????????????? Future Labour Market Trends: The long-term economic consequences are still unfolding, and China is closely monitoring trends in the labour markets, aging population, and demographic shifts to make informed policy decisions.

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As can be seen from the above, the economic consequences of China's One Child Policy are complex and complicated. While the Policy initially contributed to a demographic dividend and economic growth it also progressively brought in challenges such as an aging population, labour force contraction, and gender imbalances as noted above. The adjustments made by the Chinese government, including the phasing out of the one-child policy, reflect a recognition of the need for a more balanced demographic structure to sustain economic development. The ongoing demographic changes will continue to shape China's economic landscape for years to come. Learning from the Chinese experience let us look at the legacy this well-intentioned Policy has left behind. The One Child Policy in China initially had a significant positive impact on demographic dividend of the country. Demographic dividend refers to a period when the proportion of the working-age population is larger than the dependent (young and elderly) population, creating favourable conditions for economic growth.

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1.?????? In the initial phases of the One Child Policy, China did harvest a sizeable demographic dividend. By limiting population growth, the Policy led to a larger working-age population compared to the number of dependents. This demographic structure created conditions for increased savings, investment, and economic productivity. A growing population can create opportunities for entrepreneurship, especially in sectors related to healthcare, education, housing, and other services needed to meet the expanding needs of the population. If there is a demographic structure that includes a higher proportion of working-age individuals relative to dependents, a demographic dividend can occur. This can result in increased productivity, savings and investment contributing to economic growth. The demographic dividend faced increased challenges as the aging population increased. The reduced birth rate and increased life expectancy led to an aging society, shifting the population structure towards a higher dependency ratio and potential economic challenges.

2.?????? With a lower dependency ratio (the ratio of dependents to the working-age population), households had fewer dependents to support. This contributed to increased savings as families allocated more resources to education, housing, and other investments. A larger population can potentially lead to a larger pool of human capital. However, realising the benefits requires investments in education, healthcare, and skills development to ensure that the workforce is equipped for productive economic participation.

3.?????? The Policy resulted in a large number of individuals entering the workforce. This expansion of the labour force contributed to China's rapid economic growth especially in labour-intensive industries such as manufacturing. A larger population provides a larger domestic market. This increased market size can attract investments and spur innovation as businesses seek to meet the demands of a growing and diverse consumer base. However, rapid population growth may exacerbate income inequality if economic opportunities are not distributed equitably. Ensuring inclusive economic growth thus becomes crucial in such contexts.

4.?????? The demographic dividend coincided with a period of rapid urbanisation. The influx of young, working-age individuals into cities played a crucial role in supporting industrialisation and economic development. A growing population often means an increase in consumer demand for goods and services. This can stimulate economic activity, encourage investment, and drive growth in various sectors, including retail, housing and infrastructure. Meeting the needs of a larger population in terms of education, healthcare, and social services requires adequate planning and investment. Effectively managed, this can enhance the overall well-being of the population.

5.?????? A demographic structure with a higher proportion of working-age individuals can contribute to increased labour force productivity. This productivity boost is a key element of the demographic dividend. An increase in population can contribute to a larger labour force. This expansion, if accompanied by appropriate education and skill development, can lead to increased productivity, economic output, and overall economic growth. However, a rapidly growing population may pose challenges in terms of providing adequate infrastructure such as transportation, housing, and utilities. It also presents opportunities for infrastructure development projects that can stimulate economic activity.

6.?????? While the One Child Policy initially contributed to a demographic dividend, it also set the stage for demographic challenges. As the population aged, the potential benefits of the demographic dividend faced the risk of reversal. Rapid population growth, if not accompanied by job creation and economic development can result in elevated levels of unemployment and underemployment. This can lead to social and economic challenges. A significant increase in population without corresponding increases in resource availability can lead to challenges such as resource scarcity, environmental degradation, and strain on public services. An increase in population may necessitate increased government expenditure to provide essential services, and this can impact fiscal policy, requiring efficient resource allocation and revenue management.

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Recognising the evolving demographic landscape, the Chinese government phased out the One Child Policy and introduced policies to encourage higher birth rates, such as the two-child policy and later the three-child policy. As mentioned above these adjustments aim to address the challenges associated with an aging population. The effects of the One Child Policy on the demographic dividend continue to influence economic policies in China even today. Policymakers are navigating the delicate balance between encouraging population growth and managing the economic implications of an aging society. The One Child Policy initially contributed to a demographic dividend in China by creating conditions for a large and productive working-age population. However, the Policy also introduced challenges related to an aging population. The adjustments made by the Chinese government reflect the ongoing efforts to adapt to demographic changes and continue to sustain economic growth. The long-term impact will depend on the success of policies aimed at addressing demographic challenges while fostering sustainable economic development. One has to keep in mind that the economic implications of population growth can be influenced by a range of factors, including government policies, institutional capacity, technological advancements, and the overall economic environment. Additionally, the quality of population growth, in terms of education and skills, is critical for realising the positive economic potential associated with demographic expansion of a New China.

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Before concluding this piece, let me quote the following from the Financial Times attributed to Ruchir Sharma, the eminent Economist. “Meanwhile, a hoped-for post-lockdown economic boom did not materialise. As China faces headwinds that include severe demographic decline—decades of the so-called one-child policy have left China with an aging population and fewer young people to refill the working ranks—Ruchir Sharma writes in a Financial Times column ?of a drastic change in China’s fortune: “In a historic turn, China’s rise as an economic superpower is reversing. The biggest global story of the past half century may be over.” ?We Indians may have our own reasons to be jealous of China and its achievements in redefining the modern world. However, if this prediction is proved to be correct the world would pay a huge economic price and an entirely new world order may emerge sooner than we had imagined.

?Thank you.

?Venkat R Venkitachalam