The One Child Policy: a postmortem

Chinese couples and human rights advocates earned a huge victory last week when China revealed that the complicated set of rules known as the One Child Policy (OCP) have come to an end, being replaced by slightly more lenient “two child policy.” The announcement signifies a major milestone in a long process of reversing what has been perhaps the most controversial social contract and natural experiment in the world. But the reversal has been very gradual, so no one expects a baby boom. Indeed for the past decade, most couples have been allowed to have two or more children. Thus the slow bureaucratic change of heart is not a softening at all, rather it highlights the obvious irrelevance of the OCP as China’s population expansion has come to a standstill. Demand for more than one child has been below the replacement rate for over 20 years, as Chinese lifestyles and costs of living have converged with urbanites in the developed world.

To put it in an even more stark perspective, never has there been this little demand to make babies in the entirety of Chinese history (except perhaps some periods of extreme social upheaval). The fertility rate has been persistently low for so long that China’s population is expected to start shrinking in about 10 years. This is most acute in the urban areas, which offer an aspiring representation China’s gleaming future. Counted as it’s own country, Shanghai would have the lowest fertility rate in the world at 0.7. That’s lower than the notoriously childfree Hong Kong or Singapore. And unfortunately even in an optimistic future scenario, immigration is unlikely to be a mitigating factor in the coming decades. So how did this massive reversal of fortune sneak past the ever mindful Communist Party of China while birth restrictions were still being enforced?

The One Child Policy was never about containing overpopulation

Well, it didn’t. And in all likelihood, the CPC knew they were riding a global trend the whole time. Birth rates had fallen for a full decade before the OCP went into full effect in 1980. The reason was traditional family planning policy started in the early 1970s: contraception, education and slogans painted everywhere. Perhaps equally important was the dismantling of the Maoist communes, which were redistributive and lowered the time and resource costs of having children. Another revealing observation is that the drops in fertility rate province by province correlate more closely with economic performance than with the highly non-uniform intensity of policy implementation. Whatever the potential multitude of reasons, as it did elsewhere in the world the Chinese family shrunk throughout the 70s. In fact it did most of the shrinking before the OCP was enacted, a semi-embarrassing fact for the Party’s preferred narrative. The CPC boasts 400 million births prevented, but that estimate almost certainly contains the effects of this earlier, uncontroversial era of family planning and reforms.

The true benefit of the OCP is in the way it acted in concert with China’s urbanization and industrialization efforts, both of which accelerated dramatically in the calm period after 1989. A manufacturing and trade boom along with the rationing of urban housing and urban status lead to an urgency among rural Chinese to get into the cities. The government could ill afford the city dwellers to milk their privilege by producing a surplus of dependents who would strain the finances of the city. If the countryside was to be drained of people, there could not be a clog in the system. Limiting the non-working population of urban China was a convenient way make way for the peasant migration. It also helped reduce the cost of providing the desirable urban public services, which were necessary to coax hundreds of millions to relocate. Instead of spending extra money on health and education for kids — investments that would take at least two decades to start paying off — cities could invest that surplus into development, industry, transportation and other fast growth activities. Which they did, in abundance. That doesn’t imply that the quality of health and education isn’t as high as it could be. Indeed, the quality of both improved dramatically. But the proximate goal was to keep costs low and easily manageable for municipalities over the next few decades. And it worked because the central government stuck with the birth restrictions, and enforcement was strictest in cities.

Besides making for better schools and larger subway systems, the OCP added more unencumbered urban young adults (especially women) to the work force. Which means more taxable and disposable income was generated than would have without birth restrictions. It quickly becomes obvious that regardless of the dubious Malthusian benefits of the OCP, what’s certain is that it helped speed up GDP.

The benefits have been reaped and now the bill is due

Now all those tailwinds have come to an end, and some have transformed into headwinds. Over 35 years of declining fertility rate means a rapid ageing of society is all but assured for China. The generation-long benefits of keeping kids out of cities will unwind at a rate unparalleled in history. Besides for defending prior action and preserving face, the OCP has become completely untenable. Yet even when it seems obvious change is necessary, bureaucratic inertia can take years to overcome.

One speculation is that the desire to have a lever on reproductive decisions (even if largely ineffective) might stem from a uniquely Chinese fear of a large youth population. With the memory of students of radical doctrine renouncing and condemning their elders in the chilling tumult of the Cultural Revolution, maybe having a way to limit the urban youth numbers seems prudent. Americans tend to associate Chinese youth as victims à la Tiananmen, the impressionable little monsters in the Red Guards got away with terrorism and murder.

Or it may be employment concerns that make the government reluctant to change course. The new two child policy might be evidence of a grand compromise brokered between the demographers and policy planners who goad the central Party to increase the birth rate, and the OCP’s more than 1 million employees who like things the way they are. The nosy and unpopular TSA by comparison is less than one-tenth that size — imagine the clout their lobby has.

And it’s unclear whether the dependency ratios and the problems of providing social services in the face of a shrinking taxable base are even the worse of the problems the OCP has produced. Gender-informed abortions, while not uniquely caused by birth restrictions, have amplified the unnatural distortion in male to female birth ratios. Gender ratios among second and third children in families that had them tend to be worse than in other countries that have gender imbalances, but I am unaware of exhaustive studies that attribute the imbalance solely to the OCP.

The material effects of the One Child Policy are exaggerated, both good and bad

The CPC wants you to believe that the 35 years of birth restrictions have been necessary and prevented something like 400 million births. And detractors of the Party and human rights advocates will point to the gender imbalance as a hallmark of the atrocious policy. Yet the available data makes hard to believe either side. Since it the massive drop in fertility and gender imbalance phenomena are common in developing countries, it’s difficult to assign credit or blame to the OCP. As much as both sides want to think the Chinese government is in command of everything within its borders, controlling these global trends is beyond the means of even the most capable (and evil) bureaucracy. However, even a small marginal impact translates into a large absolute effect in a country the size of China’s. Undoubtedly millions of families have been needlessly traumatized by crude enforcement, not to mention the inherent amorality of the law itself.

It’s clear to me that the OCP has had a positive impact on growth and urbanization for the last few decades, and will have a negative impact on the economy over the next few decades. Other claims — the ones most commonly cited, such as overpopulation, gender imbalance, environmental impact, etc. — are much less clear. All in all, the most trustworthy estimates say OCP probably prevented 100 million births, mostly of females. In the absence of the OCP, China’s population would be about 7-10% larger and slightly more gender balanced than it currently is.