Population Is the Amplifier of China’s Economic and Social Problems
— Some Reflections on China’s “New Family-Planning” Policy
Ma Siwei (马四维)
Recently, an online debate has unfolded between the overseas demographer Yi Fuxian (易富贤) and the Chinese rural economist Guo Yanhua (郭岩华) over the questions “Does population fall first or the economy decline first?” and “Will China experience a ‘population cliff’?” The two sides’ tones could not be more different, and because the argument touches on whether—and how—China should advance a “new family-planning” national policy, it is worth close attention.
In Yi Fuxian’s view, China’s current growth weakness is, first and foremost, “demography before economics.” The long-term low fertility left by the one-child era has kept the total fertility rate well below replacement; at the same time, delayed marriage, rising non-marriage and childlessness, and a skewed sex ratio have combined to push labor supply past its peak and to drive the old-age dependency ratio sharply higher. He argues that official statistics have long overestimated births and underestimated attrition and out-migration, masking the true speed of population decline. As a result, rigid expenditures—pensions, health insurance, education—continue to crowd fiscal space and the room for industrial upgrading, while the structures of consumption and investment are forced to contract. Without newborns and a rising cohort of young middle-class households, domestic demand cannot be ignited; real estate and local government debt will be even harder to clear; the “demographic dividend” for innovation and entrepreneurship will not reappear. Unless the legacies of restrictive birth control are institutionally dismantled, the costs of childbearing and childrearing systematically lowered, the retirement age raised in tandem, and immigration introduced prudently, any “stimulus-led rebound” will prove evanescent, and the economy will slip into a slow spiral of “population falls first—demand weakens—debt-deflation.”
Guo Yanhua’s position is more “contrarian”: he stresses that China’s population is currently experiencing a “modest decrement” (on the order of one to two million per year), not a “precipitous collapse.” He locates the main cause of economic slowdown in the liquidity squeeze and weakening expectations triggered by real-estate de-leveraging, and believes that, so long as monetary and fiscal tools work in concert, the economy can stabilize quickly after a “track switch.” He also counters “linear extrapolations” of doom: once upon a time, some used linear models to derive that “China’s population would grow without bound,” and now others use the same method to assert that “the population will fall linearly off a cliff”—both, he says, are methodological errors. He adds three points: first, China is approaching the high-income threshold and, like advanced economies, will naturally see “modernization pressures leading to voluntary fertility restraint”; second, once macro conditions and policy tailwinds are in place, fertility is not irreversible; third, what truly matters is “structural reform”—above all, the “three-rural” agenda, marketization of land-use rights, free flow of factors, and urban–rural integration—to liberate fertility and consumption that are trapped in institutional interstices.
I am in favor of putting the differences squarely on the table and taking the problem apart. Population is determined by only three things: births, deaths, and mobility; economic growth is the product of only three factors: labor, capital, and productivity. Whoever changes the “prices” and “incentives” behind childbearing and migration rewrites the population curve; whoever makes workers “thicker,” capital “more precise,” and efficiency “higher” raises the ceiling of growth. Setting these two boards side by side keeps us from being led around by a single slogan.
Once a modern society moves toward large-scale urbanization, women spend more years in education and participate more deeply in the labor force; the “time price” and “opportunity cost” of childbearing rise immediately. Housing, commuting, and the physical space required for childrearing—these “residential prices”—are naturally higher in cities; educational competition turns “raising a child” from an emotional commitment into a long-term, visible, and ever-rising cash outlay. Stack these three prices together and any country will slide toward low fertility—America, Europe, Japan, and South Korea have not escaped. In other words, low fertility is, first of all, a “disease of modernity,” not a “Chinese peculiarity.”
China’s peculiarity lies not in “whether fertility will fall,” but in “why it is falling faster, deeper, and stickier.” The direct effect of family planning is obvious: driving the total fertility rate very low in a short time. Less appreciated are its indirect effects: over more than three decades, “fewer, better births” became synonymous with obedience, respectability, and rationality, and were internalized—through administration and propaganda—into household decisions, especially among urban, public-sector, and middle-class families. After the official stance was loosened, attitudes did not automatically rebound; the marriage and childbearing timetable of the one-child generation has been durably postponed; in some regions the sex ratio has been skewed, and the marriage market continues to squeeze low-income men and those in less developed areas; the “4–2–1” intergenerational structure concentrates elder-care burdens on the marriage-age cohort. These overlaps of attitude, structure, and institution have analogues elsewhere, but the intensity and coupling are higher in China.
With urbanization and the mass influx of migrant workers into cities, the impact of family planning on economically underdeveloped rural areas has grown greater. In the early years, the countryside indeed had “wider apertures” on paper than cities (such as “a second child permitted after a first daughter,” and differentiated rules for ethnic minorities and remote areas), but enforcement in many places was not light—indeed, it could be harsher. (In my own home province of Anhui, my elder uncle had his thatched house torn down for having a child above quota and died with wrongs unredressed.) More crucially, the mechanisms by which rural fertility continued to decline differ from those in cities: large-scale out-migration for work led to long-term spatial separation, making it hard for couples to plan a second child together; migrant children in cities faced real obstacles in school enrollment, childcare, and health-insurance continuity—“one’s body is in the city, one’s rights remain back home”—so steadily raising multiple children in the city became a luxury; farm incomes were unstable and land rights hard to monetize, nudging household risk preferences toward caution and pushing the threshold from “can afford to have a child” to “can afford to raise one securely” ever higher. Thus, on the urban side, attitudes and opportunity costs hold fertility down; on the rural side, governance legacies, frictions in mobility, and gaps in public services form a three-way pincer. Together they compress the total fertility rate from both directions.
Urbanization and migrant labor flows do not directly “reduce people”; they reduce “births.” When farmers stop tilling and move into construction sites and factories, crowded living conditions, the breakage of childcare networks, and long-term spousal separation visibly suppress the probability of a second child; where household registration and public services fail to keep pace, migrant children face hurdles in school places, childcare, and health insurance at every turn, and the desire to have children is slowly eroded. This pattern exists in many countries, but China has stacked thicker layers of institutional friction: the binding of benefits to status, sharp stratification of educational resources, and the coupling of school districts, property, and public finance have forced the act of “having a child”—once buffered by kin networks and local mutual aid—into a regulatory space that is costlier and more complex. In cities, the rational norm of “small and high-quality” becomes common sense; among young migrant workers, concrete costs pin their feet. With a push from both ends, fertility lies flat at a low level.
Returning to a focal point of the debate: does “population drag the economy” or does “the economy drag population”? From the simple growth identity, population decline compresses labor supply and raises the dependency ratio over the medium to long term—that is a hard constraint. But the recent slowdown looks, in the short run, more like the composite result of real-estate de-leveraging, local-government debt constraints, weaker external demand, and cooler private-sector expectations. When the economic weather turns, young people cannot see a steady future, and childbearing choices naturally become more conservative; and when fertility sticks at a low level, fiscal, social-security, and medical burdens pile up layer by layer, while shifts in the savings structure and industrial rebalancing press down on investment and employment in return. Two gears jam each other, and the cycle turns bad.
It is inaccurate to blame today’s predicament entirely on a “population cliff,” and equally inaccurate to treat population as a “trifling variable.” On the question of a “population cliff,” I would say that, rather than fixating on aggregate swings, we should fix our gaze on three more crucial things: whether a larger share of each year’s newborns actually completes the full chain of public services in cities; whether women’s labor-force participation can continue to rise without sacrificing the willingness to have children; and whether Chinese under thirty-five can see certainty in the triad of “housing—childcare—education.” If these three are improving, society will be more stable even if the aggregate declines; if they are deteriorating, then even a short-term “policy rebound” will be ground down by reality. The better approach is to acknowledge that population and economy operate within a single loop, and then to remove the sources of friction in that loop one by one.
I understand Yi Fuxian’s emphasis on the “hard constraint” of demography, and I agree with Guo Yanhua’s warning against “linear panic.” But I would still recommend looking at the present through the lens of “three curves.” The first is the fertility curve, determined by the triple prices of time, residence, and education together with the marriage-and-childbearing regime; it is hard to lift with cash subsidies in the short term, and only likely to loosen if those triple prices are truly pushed down. The second is the mobility curve, determined by the portability of household registration and public services; only when “where a person is, rights are,” will childbearing cease to be long suppressed by the split between work and life. The third is the industrial curve, concerning the rebalancing among real estate, infrastructure, manufacturing, and services; it determines whether young people can see a foreseeable path of “schooling—employment—settling—childrearing.” When all three curves slope downward together, we get a negative cycle of “fewer births—weak expectations—weaker investment.” Conversely, even a slight upward arch in each can, in combination, pull the cycle back to the positive.
Some pin their hopes on “a single relaxation on paper” or “a one-off subsidy,” and treat the notion that “liquidity will revive demand” as a master key. That will not do. Childbearing is not a blitz campaign; it is the feasibility of a way of life. Liquidity can rescue cash flow in the short term, but it cannot automatically fix structural problems such as the costs of childbearing, stratification in education, household-registration barriers, and a workplace environment friendly to women. To borrow an image: watering a tree is necessary, but if the roots are stuck in hard soil, no amount of watering will revive it. Poor soil cannot raise good fruit. Faced with today’s economic downturn, “no marriage, no childbearing” has become fashionable among a new generation. Young people are not shirking responsibility; they simply refuse to take on debt blindly when they cannot see a future. They do not dislike children; they are unwilling to throw them into a childhood that resembles a training camp and into ever-rising costs of rearing and education. The task of policy is not to preach how people should live, but to assume the slice of risk that rightly belongs to the public sector, so that individual choices about marriage and the wish to have children rest on a secure material foundation.
Specifically, genuine repair means a series of concrete projects that take people as the starting point: treating childcare for ages zero to three as public infrastructure; in neighborhoods dense with new urban residents, ensuring “more points of service, flexible hours, and capped prices”; opening, in earnest, the gate to nearby school enrollment for migrant children and allowing one-click transfers of social-security and health-insurance accounts, so young families do not lose basic rights in transit; shifting housing policy from an “asset mindset” to a “childrearing mindset,” easing the burden on first-home demand, providing dignified supply of affordable rental housing, and giving families with two or three children predictable priority within school-district and public-rental systems; making the equalization of compulsory education real and normalizing extended on-campus care, using in-school provision to squeeze out the “implicit tax” of off-campus tutoring; turning women’s prenatal care, maternity leave, return-to-work training, and flexible hours into a social norm supported by corporate incentives and public guarantees; moving long-term care and basic eldercare services down to the township level in rural areas, so that “left-behind elders” no longer tug adult children back to their home villages; and clarifying the rules for the circulation of contract rights, operating rights, and homestead plots, so that farmers who leave the land do not leave their entitlements and can form stable expectations of property income.
Whether the government will adopt this string of proposals is the real test of China’s current “new planned-economy” policy for promoting population growth. Solving these issues may not produce a “sharp rebound” in fertility, but it can gradually unwind the economic and social negatives of the population problem. How willing the government is to address them—and how much fiscal and policy dividend it will commit—remain unknowns. One hopes that Beijing will throw real weight behind translating these measures into the national policy of “new family planning.”
Returning to the divide between the two scholars: Yi Fuxian reminds us not to underestimate the hard constraints of demography; Guo Yanhua reminds us not to fall into linear panic. I would add one line—population is the amplifier of China’s economic and social problems. It magnifies institutional frictions, industrial transitions, and household misgivings into social mood and market direction. If we thin the frictions, steady the transition, and ease the misgivings, it will amplify positive signals; otherwise, it will turn the noise up to full volume. Population is not everything, but it is the starting point of everything else. Rather than circling around the emotion of a “cliff or no cliff,” we should yank the conversation back to the particulars of life itself: can the right to settle follow the person; can public services shoulder half the cost of raising a child; will institutions stop making it hard for women to combine work and childbearing. If these “rice-oil-salt” matters are set straight, the macro curves will naturally align; if not, slogans are only wind. If we are willing to face the difficulty, do the meticulous work, and give young people a livable, foreseeable path, the relationship between China’s population and its economy need not be one of “mutual drag,” but can become a pair that buttress each other and, slowly, move toward the good.