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Monday, 27 January 2020

Falling birth rate in China creates a time bomb for the economy (FR24)

FR24 title: Falling birth rate in China creates a time bomb for the economy

Date: 18 January 2020


"Fewer than one in four women of reproductive age in Shanghai are willing to have a second baby, another threat to a Chinese economy that is already experiencing its slowest growth in 29 years.

The National Bureau of Statistics announced on Friday that the Chinese economy had grown in 2019 to its lowest level since 1990 and that the country's birth rate had dropped to a record low. While gross domestic product increased 6.1% last year, the birth rate in China fell to 1.05%.

In Shanghai, one of the most important cities in China, the damaging effect of the one-child policy on the world's second largest economy is particularly acute.

Weng Wenlei, vice president of the Shanghai Federation of Women, a government agency, said that birth rates in Shanghai had plunged despite efforts to ease control over the Chinese population. She said births in the city had dropped "quickly" after a brief recovery in 2016, when China started allowing couples to have two children.

"This suggests (the two-child policy) has not reached its goal," said Weng. “A constantly low birth rate will have a negative impact on the social and economic development of Shanghai. "

The challenge facing Shanghai has spread across the country - and reflects a trend around the world. According to the latest UN World Population Outlook, 27 countries have fewer people now than in 2010. The UN expects 55 countries, including China, to decline by 2050.

Demographic change is creating a time bomb for the Chinese economy as the most populous nation in the world faces a shortage of labor to fuel its assembly lines and care for the elderly.

"A large, young workforce is the main driver of economic growth," said Yi Fuxian, a scientist at the University of Wisconsin in Madison. "This is what China is starting to lose. "

Note LO: see FR24 article for diagram on fertility rates in various countries 

Chinese women gave birth to 14.7 million babies last year, the lowest level in six decades, according to NBS. Yuan Xin, demographer at Nankai University, warned that population growth in China could become negative as early as 2030 when the number of deaths exceeds the number of newborns.

"This is an irreversible trend," said Yuan.

Falling birth rates have weighed on labor supply, with employers ranging from factories to restaurants facing a chronic skills shortage, putting pressure on the downturn.

A survey by the local statistical office in November of 353 businesses in Sichuan, one of the most populous provinces in China, found that 57.8% of those surveyed had difficulty filling jobs partly because of 'a decline in the working age population.

"The problem could get worse in the years to come, as fewer young people will enter the workforce," said a researcher from the Sichuan Academy of Social Sciences.

Domestic consumption in China, a key driver of economic growth, has also been a victim of the demographic challenge. Huang Wenzheng, researcher at the Center for China and Globalization, a Beijing-based think tank, said in an article last month that the economic downturn was partly the result of falling child births since the 1990s .

I don't want to risk my career to have a second child. I worked so hard to get to where I am now

"(The) Chinese economy has slowed after consumption, driven by a (shrinking) younger population has started to cool," said Huang. Retail sales rose only 8% last year, the lowest level since 1999, according to NBS.

To alleviate its demographic crisis, Beijing relaxed birth control and launched a campaign that included cash donations to encourage couples to have a second baby.

However, these efforts had a short-lived effect, with Chinese newborns increasing 8% year-on-year in 2016 before decreasing for three consecutive years.

The problem is exacerbated by the decline in the number of young women, the result of family planning that began in 1980, when many couples preferred baby boys over girls. The female population of childbearing age in China, which authorities say is 20 to 39, fell by 7% in the five years ending in 2018.

"We are facing a shortage of expectant mothers," said Yuan from Nankai University.

Cost issues have also played a role in discouraging more children. A study by the Shanghai Federation of Women last year found that more than half of local families spent at least a third of their income on children.

Josephine Pan, a Shanghai-based data analyst, abandoned plans to have a second child after spending half her family's monthly salary of 20,000 Rmb ($ 2,900) for her seven-year-old son. "It takes a fortune to raise a child," said 41-year-old Pan, who, after giving birth, gave up her hobby of a decade of buying designer bags. “I couldn't afford it. "

As in the West, a growing number of Chinese women are reluctant to have babies because they fear that children will harm their careers. Chinese employers have a tradition of discriminating against pregnant workers because many women face demotion, if not unemployment, after returning from maternity leave.

"I don't want to risk my career having a second child," said Lucy Zhang, Beijing-based newspaper editor with a five-year-old daughter. "I worked so hard to get to where I am now."

Last year, official surveys in Shanghai and Shanxi Province showed that between 10% and 25% of local women were willing to have a second child.

Only 6.7% of women in Shanghai of reproductive age who hold a local residence permit, or hukou, gave birth to a second child in 2018. Shanghai hukou the inhabitants, who represent 60% of the city's population, are better educated and wealthier than immigrants from other regions of the country.

"Raising a child takes so much time and energy," said Mary Xu, editor-in-chief of a Shanghai-based magazine who has a three-year-old daughter. " I had enough. " "

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Sources:
FR24: https://www.fr24news.com/2020/01/falling-birth-rate-in-china-creates-a-time-bomb-for-the-economy.html

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