China's population is rapidly aging, causing wages to rise due to labor shortages.
Leaders in China recognize that this is a major problem, and many agree that the country's one-child policy is to blame.
Bank of America Merrill Lynch economist believes ending this policy is the "new leaders' best, safest and easiest reform in 2013."
But in a new report to clients, Lu notes that lifting the policy may not necessarily solve the country's demographic problem.
From Lu:
China’s own experiment of two-child policy
Yicheng county of Shanxi province has maintained a two-child policy since 1985. Yicheng is just a typical rural county in Shanxi and has a GDP per capita that is about the national average. All couples in Yicheng are allowed to have two children if they marry three years later than the minimum age required nationwide (22 years for men and 20 for women) and wait for about 6 years to have the second child after the first. Despite its more relaxed regulations, the county’s population growth rate has been lower than the national average. From 1980 to 2000, the population in Yicheng only grew 19.7%, compared to 28.4% in Shanxi and 25.5% nationwide. Yicheng’s imbalance between boys and girls is also smaller than the national average. In 2000, Yicheng’s male-to-female ratio at birth was 106:100, much better than national figure of 117:100. Its total fertility rate (TFR) was only 1.51, much lower than 1.8. The trend appears to be similar in other cities/counties that have participated in such experiments with two-child policy, such as Jiuquan in Gansu, Enshi in Hubei and Chengde in Hebei province. It suggests that China’s TFR would decline naturally with or without the one-child policy, but a relaxed policy could help correct China’s imbalance in sex ratio.
It seems nothing is a sure thing.
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