Can we stop the baby bust?

Can we stop the baby bust?

Raising three children might not have been so difficult in the old days when most people lived in extended families. Take my mother and my aunt for example. Mom raised her three kids -- me and two brothers -- at home while she made desserts for sale with the help of grandma, while my auntie did so with a helping hand from her mother-in-law.

But nowadays the growing economic burden of raising a child is causing most women to have only a single boy or girl, particularly given the shaky economic outlook. Most women also have to work to generate extra income for the family, while pandemic-induced stress and health concerns have further deterred couples from having children. I'm no expert on this but I've heard many examples from my circle of friends.

In some countries where the majority of the population is having fewer children or none at all, big problems have resulted. In China, a lower birthrate and a swelling elderly population is putting pressure on the economy. The once-in-a-decade census released last month showed just 12 million new babies were born in 2020, the fewest since 1961.

China's fertility rate has fallen to 1.3 babies per woman of childbearing age, well below the 2.2 "replacement level" needed to maintain a stable population. The country's population in the last decade grew at its slowest rate since the 1950s, and may begin to shrink before 2025, according to an estimate by Bloomberg Economics.

To help sustain the economy, China is looking to raise the retirement age, one of the lowest in the world, and increase urbanisation. The government aims to gradually lift the retirement age from the current level of 60 years for men and as low as 50 for women, and for 50 million people to move permanently from rural to urban areas in the next five years.

Even that may not be enough. That helps explain the surprise decision last Monday to lift the two-child restriction and allow families to have up to three children. In 2016 Beijing lifted the decades-old one-child policy but it has done little to boost the birthrate so far.

More policy support to encourage women to have children is forthcoming, including lower educational costs, tax and housing support and guaranteeing the legal interests of working women. However, even these may not be sufficient to reverse the looming decline in the workforce and meet the challenge of an ageing population.

"For those people who are rich, relaxing the policy will encourage them to have more children but for common citizens, like the middle class or even the lower class, they don't have enough incentive to make use of this new policy," Vivian Zhan, an associate professor of Chinese politics at the Chinese University of Hong Kong, told Bloomberg.

A report last year by the Peterson Institute for International Economics also noted that women in China already face a widening gender gap in terms of workforce participation and earnings, and have borne a growing share of childcare duties as state-supported childcare has declined.

The trend toward fewer births is likely to continue even with improved policies. In East Asia and Europe generally, preferences have shifted toward smaller families even where state support is generous.

When China scrapped its one-child policy in 2016 there was a brief uptick in births followed by a decline that has steepened, with many parents citing the high costs of housing and education.

Nearly two decades ago, Japan introduced a package including free childcare and education, housing subsidies for young couples and free medical care for children. That pushed the fertility rate from 1.26 in 2005 to 1.45 in 2015, but it fell back to 1.36 in 2019.

In ageing Japan, where the population is shrinking at an alarming speed, an analysis of first-quarter data suggests Tokyo will see 80,000 fewer babies this year, a 9.2% fall from 2020. The 780,000 births expected nationwide are equivalent to the pre-pandemic estimates predicted for 2035, putting the clock on fast-forward to Japan becoming a childless dystopia.

A comprehensive set of policies, including more generous maternity leave, are needed for China and Japan to avoid an inevitable demographic drag on the economy and government resources. The right policy mix can help both countries maintain growth, while a less effective response could mean significant economic fallout and missing the opportunity to remain part of the global growth story.

Nareerat Wiriyapong

Acting Asia Focus Editor

Acting Asia Focus Editor

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