Ending China’s Birth Limits Won’t Bring a Baby Boom

(Bloomberg Opinion) -- It looks like China's decades-old policy of limiting births is finally going to bite the dust. As Bloomberg News reports from Beijing:

China is planning to scrap all limits on the number of children a family can have, according to people familiar with the matter, in what would be a historic end to a policy that spurred countless human-rights abuses and left the world's second-largest economy short of workers.

It would in fact be a historic move. Will it have much of an impact on China's birth rate? Probably not:

Fertility rates were falling in China even before the policy was imposed in 1979, and they have fallen even further since 1960 in nearby countries and territories without such rules. And while the countries in the above chart are much more affluent and urbanized than China, Asian countries at similar or earlier stages of development than China have also seen big drops in births:

Thailand is perhaps the best comparison case here: It is slightly less urbanized than China and slightly more affluent, and its fertility rate is lower than China's.

So … don't expect a Chinese baby boom, at least not a lasting one. The number of births in China did rise nearly 8 percent in 2016 after the government shifted from a one-child policy to a two-child policy the year before, but it then fell 3.5 percent in 2017. At this point I don't think there's much reason to rethink the United Nations' projection that the country's population will start shrinking in a decade.

This does not bode well for China's economic growth prospects. When birth rates fall sharply from high levels, a country can for decades enjoy what has come to be called a demographic dividend, with the ratio of those too old or too young to work to the working-age population (known as the age-dependency ratio) dropping below 50 percent and growth accelerating. China's great growth spurt of the past four decades has in fact coincided with a steep drop in its age-dependency ratio. Those days are over; China hit peak demographic dividend in 2010, and its age-dependency ratio is expected to cross 50 percent in 2032.

This is the demographic reality of the 21st century: Rising affluence and urbanization bring fewer births. The shift has been most pronounced in East Asia, where low birth rates and unwillingness to tolerate mass immigration are leading to outright population shrinkage. But fertility rates are now below the 2.1-births-per-woman replacement level needed to keep the population growing in almost every wealthy nation, with the U.S. rate falling to an estimated 1.76 in 2017. They're not just falling in wealthy nations, either: The fertility rate for Latin America and the Caribbean hit a no-growth 2.06 in 2016; in South Asia, it's down to 2.46; in the Middle East and North Africa, it's down to 2.78.

This birth slowdown brings with it all sorts of economic challenges, many of them having to do with the institution of retirement and how to finance it. But half a century ago, people were freaking out about what Stanford University biologist Paul Ehrlich called the “Population Bomb” and its consequences for life on Earth. Now that bomb has fizzled or is fizzling almost everywhere. The one major region it isn't is sub-Saharan Africa:

The UN expects more than half the world's population growth over the next three decades to occur in Africa south of the Sahara. That will pose all sorts of challenges, too — for African nations, for the global environment and for the global political system if a significant share of those 1.2 billion new Africans decides to try their luck elsewhere. Then again, these growth projections assume that fertility rates in sub-Saharan Africa will continue on their current slow pace of decline. We know from history that this could change quickly, and that it wouldn't necessarily take a Chinese-style anti-childbirth policy to make it happen.

To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net

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