August 24, 2015

Bloomberg reports China President Xi considering shift in Population policy to lift all caps on children

Facing a demographic time bomb that threatens China’s economic rise, President Xi Jinping is considering shifting his priority to population growth, according to a person familiar with the discussions.

Xi’s economic planners may for the first time emphasize “population policies” over gross domestic product in the country’s next development blueprint, said the person, who asked not to be identified because the talks are private. The focus sets the stage for a host of rule changes regarding health, pensions, social welfare and possibly lifting the caps on children some families can have, the person said.

About 1.5 million couples had applied for a second child under the new policy as of May, according to the National Health and Family Planning Commission. That lagged official projections of an additional 2 million new births annually.

The results have fueled calls for a more dramatic approach as Xi finishes the country’s next five-year plan, a Stalinist holdover of China’s old command economy. The plan was expected to be discussed with Communist Party elders earlier this month before approval at party meetings in October.

China must boost births now from about 16 million per year to 24 million per year to have the work force in 2050 stabilize at about its current level. The difference with new report is that the change discussion is being attributed to Chinese president Xi.

A report from the Chinese Academy of Social Sciences, also known as CASS, said the fertility rate in China is at a dangerously low level, at 1.4 children per woman.

This number is close to the global warning of a low fertility trap, which could result in an ageing population and a labor shortage. Experts are calling on the government to fully lift all restrictions to have a second child, and the sooner the better, along with adjusting the family planning policy even more.

Stanford analysis of working age (15-64) population in 2050 based on 2008 UN medium projection. This is before the recent China policy shift which is boosting births by 1 million per year from about 15.5 million per year.

China's child policies now will determine if China has 1.3 billion in 2050 or 1.65 billion

China is expecting at least one million more births in 2015 than last year, as a result of policy changes. A total of 16.9 million new citizens came into the world in 2014, 470,000 more than in 2013, said the China Population Association (CPA) two weeks ago.

As of the end of 2014, around one million couples had applied to have a second child.

Zhai Zhenwu, head of the CPA, said many families are at the preparing stage and the number of newborns is expected to increase noticeably in 2015.

As the birth policy may continue to be eased, the baby boom may last for five to eight years, said Zhai, adding that more efforts will be made in the public service sector to meet the challenge.

After the change (plus a complete lifting of any restriction children before 2018 and a shift to incentiving babies before 2022), I estimate

2020: 1.43 billion
2030: 1.53 billion
2040: 1.6 billion
2050: 1.65 billion

Here is an analysis of China's population based on changes in total fertility combined with improved life expectancy.

Working Age Population (15-64) in 2050

Stanford had a projection of working age population

If population policies in China boost child births from 15 million to 23 million for the next 20 years then the China would have 160 million more working age people in 2050. This would prevent a drop of 110 million and perhaps increase the working age population by 5%. Working age population now is about 970 million.

Other ways to deal with the shrinking working age populations would be to increase retirement ages from 64 to say 74. This would keep the working age population stable in the face of 15% drop in overall population in the 15-64 range.

China also has a lower number of people in the urban areas in more productive jobs today. China is also boosting its more productive college educated workforce.

The overall economic impact would be effected by
* how many working age population
* when do people retired
* how urbanized - China will go from 50% to 70-80% in 2050
* how educated and productive is the workforce
* how much automation and efficiency is there

SOURCES - CCTV-America, Monash University

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