Beijing’s decision to allow couples to have three children reflects China’s two-pronged population problem — an aging and shrinking labor force. It is not clear how the three-child limit is expected to succeed where the two-child rule, introduced only a few years ago, failed to result in a sustained increase in the birth rate.
The country’s population problem revolves around women, who outnumber men at college and postgraduate education levels. China not only needs women to bolster today’s labor force, but also to boost the fertility rate — or deliver children who would supply the labor force of the future.
The question is how to persuade them to combine families and careers without the latter — and probably both — suffering. The answer must include major budget outlays to cushion the high cost of living and other pressures, such as housing and education, maternity leave, medical care, job protection and tax breaks.
Young people now weigh financial security and lifestyle against the realities of child rearing and even marriage.
The 25-member Communist Party Politburo, which includes just one woman, announced the three-child decision after a meeting chaired by President Xi Jinping. It also had discussions about postponing the retirement age and improving childcare services and maternity leave. The latter two would be more effective in improving the birth rate. Incremental rises in the retirement age would buy some time for maintaining the labor force by natural replacement.
Young people now weigh financial security and lifestyle against the realities of child rearing and even marriage. The willingness of women to have babies falls as education and income improve. Hence in some European countries, notably France, child rearing has long been heavily subsidized to cushion the cost.
Primary and secondary education may be free in China, but preschool education is especially burdensome on family budgets. Preschooling is not only important educationally but it frees parents up to pursue careers. Unlike Hong Kong, mainland couples have no access to an affordable foreign domestic helper market and private childcare does not come cheap. As a result, in the big cities, few parents are willing to have more children.
The Politburo decision is timely but bigger challenges lie ahead in creating an integrated pattern of incentives that persuade couples to start and enlarge families. One is a legacy of the much-maligned one-child policy — partners who are both only children and may already have to support four parents as well as any offspring.
Beijing has good reason to be concerned about falling birth rates. Young couples have equally good reason to wait and see what help is on offer before they commit to raising a child.
