Tackling China’s demographic challenges

Author: Zhongwei Zhao, ANU

When the 18th Central Committee of the Chinese Communist Party (CCP) decided to abolish the one-child policy in October 2015 it made headlines throughout the world. But while the abolition of the policy is the result of the Chinese government’s newfound concern over low fertility, the low birth rate is only one of several major demographic challenges facing China.

Chinese people shop in a market in Beijing, China, 14 January 2016. (Photo: AAP)

When the one-child policy was first implemented in the late 1970s it did not lead to a drastic reduction in fertility rates. Instead in the 1980s China’s Total Fertility Rates (TFRs) fluctuated between 2.2 and 2.9 children per woman. But by the early 1990s, the strong family planning program and profound socio-economic transformation led China’s fertility to fall below replacement levels for the first time. Since the mid-1990s, TFRs have generally remained below 1.6 children per woman. This has already resulted in a highly imbalanced population age structure.

The Chinese government slightly revised its previous fertility policy in 2013 to allow a married couple to have two children if one spouse was an only child. But this had very limited impact on fertility rates. According to President Xi Jinping, out of the 11 million couples who qualified to have the second child under this revised policy, only 1.69 million had applied to do so by the end of August 2015. This is because a large proportion of couples do not want to have a second child even if they are allowed to do so. It is this reality that led the CCP to completely abandon the one-child policy.

Compounding the problems posed by China’s low fertility is the related challenge of rapid population ageing. Since the mid-20th century both the number and the proportion of China’s elderly have been growing. And this trend is set to continue throughout the first half of the 21st century.

According to the UN World Population Prospects: The 2015 Revision, the number of people aged 65 and over will increase from 131 million to 371 million while those aged 80 and over will rise from 22 million to 121 million by 2050. The median age of the Chinese population will increase from 37 years in 2015 to just under 50 years in 2050. Largely because of that China’s working age population (aged 15–64) will decrease from slightly more than 1 billion in 2015 to about 800 million by 2050. As a result, the old-age dependency ratio (the ratio of the population aged 65 and over to the working age population) will increase from 0.13 to 0.47.

The phenomenal pace of China’s ageing has put great pressure on its socio-economic development. China is facing enormous challenges in establishing a nationwide pension or superannuation system that will provide adequate financial support for its rapidly growing elderly population. There are also great challenges in consolidating, and further improving, China’s now nationwide health care system.

To help overcome these difficulties, the government is emphasising the need to consolidate a family-based old-age care system, supplemented and supported by old-age care facilities provided by the community and government. To lower the financial pressure imposed by population ageing, the government has also proposed gradually increasing the retirement age.

Added to this mix is the challenge of large-scale rural–urban migration. According to the UN World Urbanisation Prospects: The 2014 Revision, China’s urban population has increased from 308 million to 758 million between 1990 and 2014 — an increase from 26 to 54 per cent of the total population. By 2050, the urban population will further rise to just over one billion or 76 per cent of the population. Although the annual rate of growth of China’s urban population will be slower than recent years, this still amounts to an increase of about 300 million people.

China’s urban population consists of two major components: those with urban household registration or Hokou and those without. The latter make up a ‘floating population’ who may not be able to permanently settle in urban areas. This division helps inhibit the formation of large urban slums, but it leads to many problems. Although many migrant workers have been in the cities for more than a decade, they are still regarded as ‘temporary migrants’ and face the risk of being forced to return to where their household registers are kept.

This uncertainty leads to the division of many families as migrant workers leave their old parents, young children or even spouses behind in rural areas. During recent decades, hundreds of millions of Chinese peasants have left their villages to work in cities. They have made enormous contributions to China’s economic growth and urban development, but their basic rights are often inadequately protected.

Like its family planning program, China’s urbanisation has been largely controlled by the government. In 2014, the government introduced its National New-Type Urbanization Plan, 2014–2020, which sets targets for urban population growth and for improving rural–urban migrants’ access to urban household registration. Recently, the Chinese leadership has also restated their goal to register 100 million rural–urban migrants as part of the urban population by 2020. But this accounts for only 40 per cent of the current 250 million floating population.

To implement its ambitious urbanisation plan, the Central Committee has proposed a number of strategies, including promoting coordinated development in urban and rural areas, advancing people-centred ‘new-type’ urbanisation, further developing small- and medium-sized cities and helping rural dwellers to settle in urban areas. With these strategies, China’s urbanisation is set to enter a new stage.

Yet, whether this, and other development strategies, will be sufficient to cope with the great socio-demographic changes brought about by China’s rapid urbanisation, ageing population and persistently low fertility rate remains a debatable question.

Zhongwei Zhao is a professor at School of Demography, College of Arts and Social Sciences, The Australian National University.