Will end of China’s one-child policy spark demographic boom? 

Craig Botham, Emerging Markets Economist, Schroders looks at the impact of the announcement that the Chinese government will end its one-child policy and whether this will lead to any demographic changes.

The end of the one-child policy is an announcement with great political significance but little immediate effect. The deleterious impact of one of history’s most successful social engineering attempts is already assured, with a 3% decline in China’s working age population projected between 2015 and 2030 by the UN.

However, our analysis suggests that this decline will have a very small impact on growth, detracting between 0.1 and 0.3 percentage points per annum from growth over that period.

The bigger cost for China will be fiscal, as its dependency ratio worsens to developed market levels even as incomes remain in emerging market territory. This will result in a painful fiscal burden for China, and it is not clear how it will be tackled.

Boosting the fertility rate would definitely help, but it is not certain that ending the one-child policy will be effective. Previous relaxations have seen relatively limited uptake – the last, in 2014, made 11 million couples eligible for a second child, but only 1 million applied to do so.

Close Window
View the Magazine

You need to fill all required fields!