Major Policy Shift explained: Why China is adopting a Three-Child Policy?

November 01, 2021
About the author:

Jiang Quanbao, Professor at Institute for Population and Development Studies, Xi'an Jiaotong University


KANG: China has relaxed its two-child norm and endorsed a three-child policy last year. What are the reasons for this policy shift? Why is it important?
JIANG: There are four main reasons for the promotion of the three-child policy.
First, China’s total fertility rate (TFR) has fallen to a very low level, and the odds of achieving a substantial increase in the future are very small. China’s TFR first began to fall below the replacement level in the 1990s and has continued to decline thereafter. Since 2000, it has fallen to a level of 1.5. In 2020, the number became 1.3. Due to mass urbanization and rapid economic development, China’s financial and social calculus has changed and multi-children households are no longer that desirable. And the trend is unlikely to reverse in the years to come. This will impact China’s social and economic development in important ways, and thus reforms on existing population policies must be implemented.
Second, the number of births has dropped rapidly over the past few decades and the age profile has changed. Since the 1970s, the number of births in China has dropped rapidly. Census data shows that 22 million babies were born in 1982. In 2000, the number became 17 million, and in 2020, 12 million. This decrease has led to tremendous changes in the age profile of China’s population. The 2020 census data shows that the number of children aged between 0-14 accounted for 17.95% of the total population. The number is less than the percentage of the elderlies aged 60 and above, which was 18.70%. In other words, China is on the way of entering an aging society.    
Third, China’s family size has shrunk, and the structure of families has changed. Since the 1980s, the size of households in China has continued to shrink. The number changed from 4.40 in 1982 to 3.44 in 2000, and 2.62 in 2020. In light of generations, the declining birthrate and the aging population have further increased the burden on individuals of elderly care, making elderly care less sustainable as individual families decrease in size. Moreover, rural migration, mass urbanization, and continuous population flow have made it increasingly difficult for live-alone elderlies to receive family care and mental comfort.
Fourth, the relaxation of the population policy, namely the selective one-child and the universal two-child policies, increased the TFR and annual births, but the effect of those relaxation faded away and both the TFR and the annual births dropped. Thus, actions are needed to step up the efforts towards this goal. In 2013, the Chinese government introduced the so-called “selective two-child policy:” couples were allowed to have a second child if either parent was an only child. In 2016, the policy was further liberalized and became the “universal two-child policy,” which allowed every couple to have two children. While the year of 2017 witnessed a surge of childbirths after the new initiative was promulgated, the number dropped subsequently in the following years due to young people’s unwillingness to have children. Therefore, a relaxation of the existing policy is necessary, and hence the three-child policy.
KANG: Can you explain briefly why young people in present days are unwilling to have children?
JIANG: There are a number of reasons for this.
The first one is that more and more women pursue higher education and career advancement. Since the promotion of higher education in the 1990s, the scale of Chinese universities has expanded rapidly. At present, the proportion of high school students in China receiving college-level education is high, and compared with the past, the amount of time that women spend on receiving education has been greatly increased, thus delaying marriages. Better educated women tend to spend more time seeking career advancement rather than entering marriages according to the traditional norm that dictates wives to focus on household matters while husbands work outside and provide for the families
The second reason is that the current broad socio-economic reality has inhibited women’s willingness to bear children to a certain extent. For most people in China, the ability to earn more money, purchase their own home, buy their cars, get married and have children, send their kids to good schools are the criterion by which to evaluate whether an individual is successful or not. As the real estate market continues to grow in China, the price of an apartment in cities has skyrocketed. This means that young people have to take a lot of effort focusing on their jobs and seeking career development, which then compromises their time and energy devoted to giving birth and raising child. If childbirth is one experience that many women consider to be of great significance in order to “make their lives complete,” as many would say, then having the second or the third child is not necessary.  
The third reason has to do with the issue of childcare. China is now in the process of vigorously developing its childcare system and improving its childcare institutions for children at the age between 0-3. Two issues can be reflected from this development. First, traditionally, a common practice of childcare for kids under three years old is that grandparents help the young couple look after their kids. However, things changed with rapid urbanization and the decrease in family size. Now, the first generation and the second generation may be geographically far apart. This has made the previous childcare model unviable for a lot of small families. In addition, more and more women have become aware of the impact that intergenerational care have on the future development of their kids. A good example is the spoil-brat character of children. And this had made young couples unwilling to ask their parents to help take care of their children when they are away at work. This consideration is also something that may affect a young family’s decision to have child, as it hinders their personal development by distracting them from their career. 
Forth, the cost of raising a child, particularly on education, is expensive. With a decline in the number of children, it is natural and rational to shift the focus from quantity to quality. While elementary and middle schools in China are offered for free within the Nine-Year Compulsory Education program, receiving continued education, attending high school and universities, and studying away from one’s hometown in pursuit of high-quality educational resources are common practices throughout the country. For example, once we conducted field research in a county where, although there were fairly good kindergartens and elementary schools built in the townships, most parents still chose to send their children out of town to receive education, even if this means that the children would be attending private schools in the county and that nursing and education expenditures would greatly increase the financial burden on the families.
The fifth reason has to do with the common problems that most marriages face in present days. Having your own apartment or house, the so-called hunfang (apartment available for marriage), is a prerequisite for entering a marriage. As I said earlier, apartment prices in cities are very expensive in relation to the average family income. And in rural areas, many people are inclined to purchase their own home in bigger town and county seats as well. This naturally leads to an extra financial burden on the family. Moreover, in some areas, families are divided into different classes. The first class consists of those families with two daughters. This is because Chinese traditional customs dictate that parents do not need to prepare a house and wedding gifts when they are marrying off their daughters. The second class is made up of the families with one daughter. Those with one son and one daughter belong to the third tier. Families with an only son are in the fourth, and those with two or more sons are in the bottom of this structure. One consequence of this reality is that parents with one son will not want to have a second child because the time, energy, and money that they are going to invest in raising their son are already so high that they can no longer afford to double or triple them. However, on the other hand, after giving birth to a daughter, some may choose to continue having another child (sometimes at the cost of sex-selective of female fetus) so as to achieve the widely desired “ernu shuangquan”— having both boys and girls.
But with regard to having three children, according to our survey in some rural areas, the number of couples that reacted to the three-child policy initiative was very small. In fact, little has changed despite the introduction of the new policy. The profile of those couples who decided to have the third child is pretty straightforward. Among all the couples having three children, a great number of them decided to do so because the first two babies were girls, and they had a preference for sons. Another key reason for some couples to have the third child is that they are remarried couples, and both have child from their previous relationships or marriages, and they wanted their own kids. For most people and families, they simply do not want to have a third child. So, one key area of our study is to examine under what circumstances would a couple become willing to have three children. I was told that while money is one part of it, the time and energy devoted to childbearing, household and educational duties is too much and this is an exhausting process that many people do not wish to experience again. So, has this lift of restriction come with an increase on the fertility rate? Not really. But on the other hand, people now have more options and the rights of deciding on their family size. This is indeed a major change. 
KANG: What are the key objectives? Should we take this policy initiative at face value? In other words, how should we understand the three-child policy? What are the issues or problems that the three-child policy is trying to address?
JIANG: The three-child policy can be viewed as an important message that the Chinese government is trying to deliver to the public. In short, its main objective is to optimize the existing policies and encourage childbirth. Supposedly, this will be achieved through enhancing the openness and inclusiveness of China’s existing population policies and improving relevant supporting measures such as maternal stipend, motherhood bonus, better and affordable or even free daycare, prolonged maternal leave, better educational opportunities for both urban and rural students, extend the compulsory education from 9 years to 12 years (high school),  thereby encouraging the willingness of women of childbearing age to have children. The policy is essentially aimed at elevating China’s TFR, expanding the population size, and promoting socio-economic development.
Again, the initiative was driven by the fact that China’s fertility level has declined to a fairly low level, and this is unlikely to change in a short period of time. With a gradual decline in birthrate, China will soon face a negative population growth where the size of the population will experience a steep drop. Thus, the three-child policy can be first perceived as a preventive measure that may help address this issue.
Second, the three-child policy has legitimized childbirths. China used to have the so-called “out of quota births” or “out of plan births” within the framework of the earlier planned birth policy. Millions of children born outside the system, the so-called “invisible children,” had no access to any form of social welfare, and parents had to get a letter of approval from the local family planning commission so as to register the “out of plan” kids in the family’s hukou (household registration) to prove their existence. Without an approval letter, a hefty social maintenance fee would be levied on the family for breaching the one-child policy and to register the child in the hukou system. But a lot of families could not afford to do so. Now, with the gradual relaxation of China’s population policies and the lift of the social maintenance fee, hukou registration is not a problem at all. Parents can register their children without any certificates from the family planning system.
KANG: What should we expect for the future development of China’s demography?
JIANG: According to the 2020 census data, there are several trends worth pointing out. The current population growth rate has slowed down, the sex ratio at birth has declined, and aging population has expanded, the quality of the population has improved significantly, and the size of the population living in urban cities has increased.
The future development of China’s demography will likely be characterized by the following aspects. First, the total population of China will soon reach its peak and begin to decline. And the number will continue to fall in the future. Second, the size of China’s working-age population has begun to shrink. The implication is that China needs to change its economic model by shifting its focus on maintaining the unlimited supply of labor to increasing its labor productivity. Third, in the past, marriage and childbearing used to be common practices for Chinese women. This has changed in recent years as putting off marriages and choosing to be child-free has become a norm for many young people, especially the millennials. This trend is unlikely to be reversed in the near future. Fourth, China’s aging rate will continue to accelerate. This will be a big challenge for many cities and rural areas. Currently, many elderlies residing in rural areas have to rely on their family members for financial support. The Chinese government is now in the process of establishing and improving its rural pension system. However, the result will not be evident within a few years as the challenge is not easy to be dealt with given China’s existing urban-rural divide. Fifth, the size of families will continue to shrink. There will be more single-person households, whether it is that of an elderly or a young adult.
KANG: You mentioned about the “4-2-1 family model” in your works, what is it about? Would this model change in the future? If so, how?
JIANG: The “4-2-1 family model” refers to a family model with four grandparents (first generation), two parents (second generation), and an only child (third generation) to the two parents. This structure can be observed in many societies. The reason why it is particularly interesting in China is that China once implemented the one-child policy, which has led to the emergence of the “2” in a 4-2-1 family. In the future, as the willingness of young couples to engage in childbearing practices and the actual birthrates decreases, a large proportion of couples will choose to have only one child, and this will then lead to more 4-2-1 families. Yet, the “2” in the future 4-2-1 family structure is no longer caused by the population policy instituted by the government in the 1980s. Rather, it is a manifestation of the current young generation’s willingness to procreate.
KANG: How should the state cope with the changes in the years ahead? Demographic issue is not unique to China. South Korea and Japan, for example, are countries that have an aging population. How are they addressing this issue? What are the prospects for future population policies? 
JIANG: China should refer to the experiences of other countries and formulate a series of policy measures that are most appropriate to China’s own national situation in dealing with demographic problems that may arise in the future.
Take South Korea and Japan as examples. Both have entered an aging stage in earlier decades. Referring to the practices implemented in these two countries can be insightful when we are dealing with problems including an aging population and a declining birthrate.
When Japan was faced with this aging population issue, the Japanese government played a leading role by incorporating the aging workforce into the country’s socio-economic development plan and promulgating a series of supporting laws and regulations to motivate people’s coordination. Improvement was also made to Japan’s long-term care insurance system and the senior-age employment system to encourage healthy seniors to continue to participate in the labor market. Meanwhile, in the field of medical research and automation, the Japanese government advocated scientific research institutes and enterprises to actively explore and innovate and use technological means to address the labor shortage issue and reduce the burden of elderly care on young people. The Japanese government has also encouraged corporations to seize business opportunities, actively develop the so-called “silver industry,” host various summits and forums that center around the topic of aging population to attract the attention of experts, scholars, investors in taking joint efforts with the government to deal with the concern.
Now looking at South Korea. When facing the demographic challenge, the Korean government first started by increasing the fertility rate by providing living subsidies for families, giving families with more than one child the priorities in matters such as buying or renting a house, and encouraging firms and companies to increase the wages of workers on maternity leave. Similar to the Japanese government, the Korean government has also formulated a series of laws and regulations to protect the rights and interests of the elderlies. These include the National Pension Insurance Law, the establishment of a public-private social security system, as well as a reformed pension system. South Korea has also motivated companies to hire senior citizens through subsidies and required companies to submit annual reports to ensure policy implementation.
China’s future population policy should be designed and formulated in light of today’s demographic reality. We should relax birth restrictions and implement various supporting measures to reduce the cost of “childbearing, childrearing, and education.” We should also figure out ways to effectively protect women’s rights, help female workers achieve a balance between their families and careers, build a child-friendly society, and increase the willingness of young couple to have kids. As the average life expectancy increases, the workforce can be expanded by promoting flexible retirement policies. At the same time, we should aim to transform demographic dividend into talent dividend. Towards this end, we should increase investment in education and vocational training, increase policy inclination for the development of science and technology, incentivize scientific research, innovation, and talent capital accumulation, thus injecting a new momentum for China’s socio-economic development. In short, China’s population policy should be designed to cover the entire population and become more open and inclusive.
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