What happened to the Chinese century: Malthus, the One-Child Policy and the Chinese Economic Myth
Everywhere you look, there is talk of the rise of China. It seems as inevitable as the sun rising and falling. It is rampant in popular culture, Michael Scott talks about the rise of China in the Office and the show ‘The Chinese are Coming’ already discusses the form of the ‘Chinese Century’. Indeed, this conception seems to be backed up by a basic economic analysis. The country remains the largest contributor to economic growth in the world, has overtaken Japan to become the world’s second largest economy and many analysts have estimated that it will become the largest as soon as 2030. However, the fatal flaw of this seemingly inevitable growth may lie in the work of an 18th Century Englishman.
Thomas Malthus famously used a simple formula to illustrate a terrifying inevitability. If population increases geometrically and food production increases arithmetically, then civilisation is destined for ‘extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array’. While Malthus’ predictions did not hold, the influence of his thinking reached far and wide.
Famously, Song Jian, an aerospace engineer, argued in the 1970s that the ideal size of the Chinese population was 700 million, and that despite rapidly decreasing fertility rates, the population was still increasing too fast. This was all exacerbated by the very recent history of famine in China. Between 1959-1962, Mao initiated the Great Leap Forward, an attempted economic restructuring that resulted in catastrophe. Between 15-45 million people died and it remains the worst famine in human history.
The Chinese government took Song’s advice. The One-Child Policy was initiated in 1979, mandating that each family of the majority Han ethnic group would only be allowed to have a single child, with fines in the case of non-compliance. After having their first child, women were forcefully mandated to be given IUDs, which could then only be removed through surgery. There were also incentives in place, women could get longer maternity leave and families who stuck to the rule received “Certificate of Honour for Single-Child Parents.”.
At the time, Chinese officials believed that their plan had been successful. The fertility rate decreased from about 6 children per woman in the 1960s, to about 1.5 in 2013. 400 million fewer Chinese people were born than in the absence of policy. Indeed, the decrease was credited with the exceptional economic growth Chinese growth in the last part of the 20th Century, making it the world’s second largest economy.
But the One-Child Policy is flawed. Setting aside the clearly draconian nature of the policy, as well as the horrific impact on women and the poorest families, perhaps the most telling impact of the policy has to do with demographics. While much has been made of the success of the Chinese economy, and the ‘East Asian Miracle’, the importance of demographics is often missed.
Population is the single most important driver of economic growth. While a large population in and of itself does not necessitate a large economy, it is the most significant determinant in the growth of the economy. The mathematics, much like Malthus’, are simple. More people means more consumers, more workers and the higher chance of technological innovation. Additionally, the more of a population are of working age, the greater the amount of this population that are paying taxes, contributing to the wellbeing of seniors and children. In the One-Child Policy, the CCP missed this arithmetic. Mu Guangzong, a population scholar stated that, "The people who made the policy never imagined all the problems we're facing right now. Their knowledge of demography was shallow. Now society has to pay heavily for their ignorance."
Now, due to the direct effects of the policy, this Chinese miracle may be limited. The Chinese population is expected to decrease as soon as 2030, with tax revenue decreasing, fewer and fewer available workers and a higher dependency ratio. This can be most notably seen in the 4-2-1 problem. Here, one child will be responsible for two parents and four grandparents, an unsustainable equation. Indeed, economic growth, while still relatively high, is beginning to stagnate. China ‘will grow old before it gets rich’, and never become the world’s largest economy.
There are other social consequences. China is notably multi-ethnic, with separationist groups in Xinjiang and Tibet. The CCP has succeeded in holding this ethnically fragmented country together largely through basing its legitimacy on the success of the economy. Once this economic growth falls away, the autocratic CCP may struggle to hold onto China.
While these effects have yet to come in full force, a similar situation has occurred in neighbouring Japan. In the late 20th Century, Japan was often spoken of in the same breadth as China. Quickly becoming the world’s then-second largest economy, in 1973, Japan was expected to become the world’s largest economy by 1998. However, demographics proved to be the Japanese economy’s downfall. Now, the once bright upstart is riddled with deflation, debt more than double the size of its economy and weak consumer spending. While initiated by the ‘Lost Decade’ of the 1990s, Japan’s slowdown has been driven by it’s shrinking population. The country is now classified as ‘super-old’ , with its population falling by approximately 600,000 every year. Indeed, Japan now buys more adult diapers than children’s diapers.
The one-child policy ended on New Year’s Day 2016, spelling an end to the longest and largest experiment in population control. Perhaps, it might not be too little, too late. China may buck the Japanese example and may go on to become the world's biggest economy and maybe, become the world’s foremost superpower. The CCP may continue to hold control over China. But, fundamentally the party has evaded one demographic issue and exchanged it with another, and it may spell the end of their 70 year rule. Maybe too much analysis has talked about what China will do to the world. Rather, it may be how China deals with itself that defines how we will be talking about one of humanity’s oldest civilisations.
