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The Change for Chinese Demographic Policies and Their Effect on Economic

Autor:   •  December 2, 2018  •  2,341 Words (10 Pages)  •  97 Views

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development. Compared with former generation, nowadays, Chinese consumers are more wealth and have higher education level, they are willing to spent much more part of their income to purchase or invest rather than deposit. Chinese citizen’s capita disposable income have great increase after 1980. According to data released by the National Bureau of Statistics, in 2015 China’s annual per capita disposable income of 21,966 yuan, an increase of 8.9% over the previous year nominal price, after deducting price factors, the actual growth is 7.4%. Besides, per capita disposable income of urban residents was 31,195, an increase of 8.2% over the previous year nominal price. McKinsey Global Institute belies that China’s urban monthly income of $2100 (about 13.614.3 yuan) over the working-age households, the expected proportion will increase from 4% in 2010 to 54% in 2030. This will push up per capita consumption of Chinese urban working-age population, from $4800 (about 31,118 yuan) rose to $ 10,700 ( about 69,368yuan) in 2030. The new generation play a vital role to rise Chinese domestic consumption and then encourage the development for relative industries.

Besides, the one-child policy enhanced the quality of population rather than quantity, providing more and more high quality workforce and then stimulate Chinses economic development. The only child generation gains much more opportunities to reach high quality education then before. There is a change between population quantity and quality. The decrease of quantity contributes to the raise of quality, for the focus of resources and capital. The only child generation’s education level and citizen quality are greatly enhanced and then provides a lot of high quality workers for market, then boost Chinses economic develop form low-skilled industry to high-skilled or high-tech industry. This affect from one-child policy assists Chinese to change the population structure and those high quality populations make great contribution to Chinses economic development after 1990s. China has more possibility to develop high-tech industry, financial industry and so on.

At last, although the one-child policy brings the problem for aging problem. It also let some people see the potential pension market. This market has big potential, firstly because of the increase of the elder. Secondly, because of the one-child policy, the main labor force in the family, the younger couple should take care of the live for four elders and take their kids at the same time. It is a big challenge for them. So the communities service, nursing service and nursing home will help to release this problem. These part will become potential market in the future. Also, the health- related industry also will have a better chance for development.

However, the One-child policy was issued for around 35 years. The economic and social condition in China has also changed a lot. The old demographic policy is no longer suitable for country’s development in the future. The population dividend is reducing. The biggest quantity of Chinese population reached the peak in 2015. Aging problem becomes a worried part for society. As following shows in the table 2 below, we can see that if the one-child police continues, China will suffer huge burden for lack of labor force and has a sharply decrease due to the influence of one-child policy. In most of the recent years, China is a net export country which means China is greatly rely on export to improve economic development. If the quantity of labor decrease sharply, China will lose its advantages for low-price labor and face huge risk in the future. At this time, the issue of two-child policy will help China to solve many problems.

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Proportion of Working age population 1950-2050( 16-65 years old population)

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Table 2: Proportion of Working age population 1950-2050 Resources form: United nation and CICC Research Department

Two- Child policy

Although the two-child policy is just issued this year, it is expected to affect China’s economic in the following areas. Many people think that the positive affect for two- child policy is that it serves as a buffer for Chinese economy in long-term situation and is relatively limited effect for short-term economy.

Firstly, in the short term, the baby boom from two-child policy will bring benefit to children-related industries such as food products, toys, maternal and child health care, children’s clothing, education and pension industry. If we calculate the rural average cost of raising a baby for around 200,000 yuan, the new baby boom will bring the consumption bonus of about 1200-1600 billion annually. For Chinese traditional customs, the expenditure for children accounts for a big part in the whole family expenditure. According to urban children lifestyle 2013-2014 research report, on average, Children under 16 years old constitutes for around 60% family expenditure. The children-related industry is a very big potential market.

Japan U.S China Vietnam India

In the medium and long term, the baby boom will change the age structure of China’s population, slowing the aging rate and supplement the size of the working age population to a certain degree. In China, the real estate industry such as housing and construction is the cornerstone for economy, which accounts for around 16% in Chinese GDP through 2009-2014. 20-44-year-old population is the main force for buying house. National Health and Family Planning Commission predicts if the two- child policy can encourage people to have the baby reach their expectation, then in 2050, the proportion of 20-44-year-old population will increase by 4% by increasing 128million people. Those people will promote the real estate industry for a new development period.1

At last, if the two-child policy’s expectation can be fully reached, it will have a positive impact of economic growth in the long-term. The Fangzheng Security Institution made a research to measure the demographic dividend. It chooses statistics about population structure from 34 countries as analytical sample, and then builds a median of age- related economic growth Model. According to the model, if the first five years after two-child policy is fully reached, the potential increase for CDP will have a small increase for 0.066% compared to last year, which is negligible. 2However, with the increase of the year for implementation, the potential growth of China’s GDP will gradually rise, which in 2025-2035, 2035-2045 potential GDP growth will average increase,


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