When China relaxed its one-child policy and allowed parents to apply to have a second child, officials expected that a pent-up demand for children would produce one or two more million new Chinese workers. Not so much, it seems. According to the Economist, only 270,000 parents have applied for their second child:
The government and investors have overestimated the pent-up demand for babies. As in wealthier countries, preferences in China have shifted markedly towards smaller families. The cost of raising children has soared in cities, where competition to land a good kindergarten place is fierce. Costly housing puts a premium on living space. Analysts at Credit Suisse, a bank, reckon it takes roughly 25,000 yuan ($4,030) a year to raise a young child. That is equivalent almost to the average annual income in China. […]The legacy of China’s one-child policy, now over three decades old, exacerbates the problem. Grandparents are traditionally a fixture in Chinese households helping to raise the young. But with couples waiting till later in life to have children, some parents find that they are looking after both their elders and their newborn.
The reason the Chinese government eased the policy was, of course, to beef up their tax-paying workforce, whose future is threatened by unsustainably low birth rates (China is currently at 1.5 children per couple; replacement is 2.1). But it looks like the same trends that have led to low birthrates in the U.S. are at work in China, which will make it even harder for the country to climb back to replacement level after its success in enforcing the one-child policy.This is a long-term demographic problem that the country will have to manage successfully if it wants to continue its economic progress. Several factors will help the country adapt, however. The fact that the Chinese are living longer, for example, means they will likely stay in the workforce longer as well, cushioning the effects of low birth rates. Furthermore, a more urbanized and educated population means more people are pulled into skilled work than ever before. But overall China will have to manage its birth rates better than it is doing; perhaps it can take a page from Russia’s book.