China Still A Long Way From Solving Its Demographic Crisis

Business, China, Company Strategy, Economics

china_one_childSO much for a new demographic dividend, as we warned last November when China announced that it had relaxed its one-child policy.

If you recall, Beijing decided that couples would be allowed to have two children if just one of them was an only child. The previous system stipulated that both parents had to be only children for the couple to be exempted. There are also other existing exemptions, including permission for ethnic minorities to have more than one child.

But we cautioned that, apart from the more obvious problem that the one-child policy had left a legacy of not enough women, young people had also got out of the habit of having more than one baby because of the cost of living.

Investors, however, became convinced that a baby boom was on the way.

The Economist, however , points in this article from its 19 July issue:

About 270,000 couples applied for permission to have second children by the end of May, and 240,000 received it, according to the national family-planning commission. It means China will fall well short of the 1m-2m extra births that Wang Peian, the deputy director of the commission, had predicted.

The problem is partly bureaucratic. China announced the relaxation of the one-child policy in November: if at least one of two parents is a single child, the couple may have two children. Provinces began implementing the new rule only in January. Fearful of a baby boom that would overwhelm hospitals and, eventually, schools, they have made the application process cumbersome. In the eastern city of Jinan, for instance, would-be parents must provide seven different documents, including statements from employers certifying their marital status.

Another problem is that it costs  25,000 yuan ($4,030) a year to raise a young child, which is equivalent almost to the average annual income, adds the same article.

What The Economist fails to mention is that the cost of real estate also makes having anything more than one child,  or even one child, prohibitively expensive for many couples in China.

So what does this tells us?

It tells is that China has another reason to for taking the air out of its property bubble.

It also tells is that China must, and we are sure will, press ahead with its anti-corruption drive in order to create more equitable society.

“I have a degree in chemicals engineering and an MBA, but I am not connected and so I don’t have any chance of making a good living. I am worried about the cost of starting a family,” we were told by a Beijing resident last year.

By connected he meant that neither of his parents were either politicians or politically well-connected business people.

China has to press ahead with these reforms as there is simply no way that it can allow its birth rate to remain where it is at the moment, just 1.5 per woman compared with the replacement rate of 2.1. Any country, particularly a developing country such as China, cannot afford a birth rate of only 1.5.

PREVIOUS POST

China Peak Manufacturing Season Disappoints

17/07/2014

By John Richardson THE chemicals industry, because it supplies so many downstrea...

Learn more
NEXT POST

China Going To Plan: Credit Up Just 4%

21/07/2014

By John Richardson TOTAL social financing (TSF) in China increased by just 4% in...

Learn more
More posts
Global polyethylene oversupply, the highest in 19 years, hasn’t gone away
03/07/2020

By John Richardson BRENT crude futures surged by 80% during the second quarter and enjoyed their bes...

Read
China could be in complete polypropylene self-sufficiency by 2022
28/06/2020

By John Richardson SORRY to labour the point but this comes from a genuine concern for the readers o...

Read
Asian polyethylene price recovery faces multiple challenges
25/06/2020

By John Richardson THERE are reports of significant cuts in Middle East polyethylene (PE) operating ...

Read
China’s long-term ambition for paraxylene self-sufficiency seems close to being realised
21/06/2020

On Friday, I examined how China’s paraxylene (PX) net imports could fall to as little 8m tonne...

Read
China’s big declines in 2020 PX and PP imports: the impact on its major trading partners
18/06/2020

By John Richardson CHINA’S refineries and petrochemicals plants came roaring back to almost fu...

Read
Paraxylene demand collapses as higher China production threatens 6m tonne fall in imports
15/06/2020

By John Richardson DON’T SAY I didn’t tell you that a decline in stock markets would happen. The...

Read
Coronavirus will severely damage the developing world unless we take the right steps
12/06/2020

By John Richardson IT IS a fantastic achievement. “Over the last 25 years, more than a billion peo...

Read
Main Street versus Wall Street and the crisis in the developing world
10/06/2020

By John Richardson RISING equity and oil markets do not necessarily point to a V-shaped recovery. I ...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more