China abandoned its decades-old one-child policy to confront a looming slump in the economy's workforce that it is probably powerless to prevent, analysts say. But there are serious doubts that Chinese couples want more children. And even if they did, it would take at least 15 years before their offspring were old enough to have an impact on the greying workforce. "In reality, the one-child policy had already been abandoned," said Patrick Artus, analyst at French investment bank Natixis.
The strict rules introduced in the 1970s have been progressively relaxed, with Beijing announcing in 2013 that couples could have two children if either of them was an only child. "That did not lead them to deciding to have more, for reasons linked to changes in ways of life, urbanisation, women working, and the fact that good schools are very expensive," Artus said. Beijing's decision is a sign of President Xi Jinping's determination to avoid an economic slowdown, he said.
Growth in the world's second largest economy is likely to slow to around seven percent this year, the lowest rate in a quarter century and a long way from the double-digit rates that it enjoyed just a few years ago. At the same time, China is heading towards a demographic shock, analysts say.
According to UN forecasts prior to Beijing's announcement, the Chinese population aged 15-59 is set to fall by around nine percent between 2015 and 2030. "China's one child policy was a logical choice at the time, though perhaps crudely enforced. Without it, China might have faced catastrophe," said Anna Smajdor, medical ethics analyst at the University of East Anglia's Norwich Medical School. "However, increasing the child quota is unlikely to work in rebalancing China's ageing population, because China like everywhere else is looking at a low birth rate especially among affluent, well-educated women."
Over the long term, there are two ways to boost economic production: increase the size of the workforce or boost productivity, said Edward Hugh, an independent economist based near Barcelona in Spain. Productivity gains are meanwhile likely to be harder to achieve as China shifts towards a consumer-led, services-based economy, he added.
Growth in the Chinese workforce has in any case made only a "small contribution" to the economy's development in the past 20 years, Capital Economics' China economist Chang Liu and Asia economist Gareth Leather said in a report. "The main reason why we expect growth to slow over the coming decades is not that the labour force will soon start to shrink but that the pace of productivity growth is likely to slow as the room for catch-up with richer economies diminishes," they wrote.
In the meantime, some people have already profited from the Chinese government's policy shift: shares in companies making baby food and nappies have climbed on the stock market on rumours of the impending end to the one-child rule.
