WEBVTT - Why China's Population Is About to Plunge 0:00:02.480 --> 0:00:05.280 China has surged in recent years to become the world's 0:00:05.360 --> 0:00:09.080 second largest economy, behind only that of the United States. 0:00:09.480 --> 0:00:12.480 But while China looks like a juggernaut, it's not invincible. 0:00:12.960 --> 0:00:15.400 The nation is facing a huge run up in debt, 0:00:15.720 --> 0:00:18.320 as well as a brewing trade war with the US. 0:00:18.920 --> 0:00:23.720 Yet there's one threat looming above all else, a declining population. 0:00:24.360 --> 0:00:26.880 On the second of our two parts special on falling 0:00:26.920 --> 0:00:30.680 fertility rates, we explore why Chinese women are having barely 0:00:30.720 --> 0:00:34.400 any children and what that means for the Asian powerhouse. 0:00:43.600 --> 0:00:46.960 Welcome to Benchmark. I'm Scott Lanman and economics editor with 0:00:47.000 --> 0:00:50.960 Bloomberg News in Washington. On last week's episode, we spoke 0:00:51.000 --> 0:00:54.440 with author Elizabeth Patkin about declining birth rates in the 0:00:54.600 --> 0:00:57.720 United States and the struggles that people like her have 0:00:57.920 --> 0:01:02.720 faced trying to overcome fortil problems. This week, we're turning 0:01:02.720 --> 0:01:06.640 our attention to China. The country is facing perhaps the 0:01:06.680 --> 0:01:11.000 biggest threat to its future, a population that's aging and 0:01:11.360 --> 0:01:15.920 about to shrink. Cy Young, professor of sociology at the 0:01:16.000 --> 0:01:19.399 University of North Carolina at Chapel Hill, is here to 0:01:19.440 --> 0:01:22.520 tell us more. He's an expert in the demographics of 0:01:22.600 --> 0:01:28.080 his native country, China, Professor PSI, welcome to benchmark my pressure. 0:01:28.600 --> 0:01:33.120 First things first, when and why did China institute the 0:01:33.160 --> 0:01:36.920 one child policy? China institute the one child part say 0:01:37.040 --> 0:01:42.360 in seventy nine slash nighties exact time as a little 0:01:42.360 --> 0:01:46.240 b mulky, because it was a decision in process. The 0:01:46.319 --> 0:01:50.680 main reason, as announced the while to achieve to help 0:01:50.720 --> 0:01:54.040 achieve the economic development and go China at the time 0:01:54.120 --> 0:02:00.240 has gdpeople cabita at about two d dollars and the 0:02:00.440 --> 0:02:05.120 goal was to reach about eight hundred dollars by the 0:02:05.200 --> 0:02:08.480 end of century. That means by two thousand and by 0:02:08.639 --> 0:02:13.520 some calculation. The way to ensure that to reach to 0:02:13.600 --> 0:02:17.160 reach that a goal was to controice population within one 0:02:17.200 --> 0:02:21.920 point to billing. That was the main reason. And what 0:02:22.000 --> 0:02:26.480 was China's fertility rate in the nineteen seventies before that 0:02:26.560 --> 0:02:31.680 policy was instituted, So the policy was institute in nine 0:02:34.040 --> 0:02:39.720 ten years before that, China facility was around six kids 0:02:39.800 --> 0:02:44.760 per woman issue and what is it now today today 0:02:45.000 --> 0:02:49.079 is about one point five. That's you know, one point six, 0:02:49.280 --> 0:02:54.120 you know, given the number is not published, that's my guestimate, okay, 0:02:54.200 --> 0:02:57.120 So it's less than a third probably of what it was. 0:02:57.639 --> 0:03:01.440 Before the policy. No, okay, let me just make sure 0:03:01.560 --> 0:03:06.040 we understand this. Before the policy, if we refer to 0:03:06.240 --> 0:03:09.720 nine and seventy nine, China's fraternity was at two point 0:03:09.840 --> 0:03:13.280 seven kids per woman because it had already gone down 0:03:13.360 --> 0:03:17.680 in anticipation of the policy. Basically, no, no, no, So 0:03:18.800 --> 0:03:23.160 there was a major push by the Communist Party in 0:03:23.240 --> 0:03:28.280 the nineties seventies called the name of the policy is 0:03:28.680 --> 0:03:32.720 called later, longer and fewer. The idea was very simple, 0:03:33.080 --> 0:03:37.360 we're basically pushing for later marriage, longer bus interview, and 0:03:37.520 --> 0:03:41.480 fewer kids. And in rough free seven eighty years, China's 0:03:41.480 --> 0:03:46.280 fraternity declined from rough free six kids to less than three. 0:03:46.480 --> 0:03:49.480 By nine seventy nine, it was already at two point 0:03:49.560 --> 0:03:52.800 seven two point eight in that range. Okay, So, thinking 0:03:52.840 --> 0:03:55.880 about that effort that you just mentioned and the one 0:03:55.960 --> 0:03:59.720 child policy in nineteen seventy nine, how much would you 0:03:59.760 --> 0:04:04.200 say the one child policy is responsible for the decline 0:04:04.360 --> 0:04:07.680 in fertility to about one point five or one point 0:04:07.760 --> 0:04:11.320 six today, Like you said, not a much, you know, 0:04:11.400 --> 0:04:14.720 so as in the number, uh what the number we 0:04:14.760 --> 0:04:18.479 decided we discussed, tell us the much of a change, 0:04:18.920 --> 0:04:21.479 the major part of a change happened before the launch 0:04:21.560 --> 0:04:26.160 of the one child particy in ninety eight, not ninety eight, 0:04:26.400 --> 0:04:29.800 all right, And there was a little bit declined from 0:04:29.960 --> 0:04:33.800 two two point seven in ninety seventy nine to rough 0:04:33.920 --> 0:04:37.520 rate one point six one point five ish right now, 0:04:38.000 --> 0:04:42.120 But that is not it should not be entirely attribute 0:04:42.160 --> 0:04:46.039 to the one child policy. We know in between those 0:04:46.480 --> 0:04:50.640 thirty five forty years that China's socio economical change it 0:04:50.800 --> 0:04:54.440 was enomous. So are you saying that you know, basically 0:04:54.480 --> 0:04:58.760 because of the increased wealth, because of the expanding economy 0:04:58.800 --> 0:05:01.559 in China. You know, the economic reforms that were also 0:05:01.640 --> 0:05:05.720 instituted in the late nineties seventies, did that play a 0:05:05.760 --> 0:05:10.080 bigger role in helping to spur decline in the fertility 0:05:10.160 --> 0:05:13.800 rate than the one child policy by itself did. So 0:05:13.960 --> 0:05:16.919 one child policy certainly had an effect, but if we 0:05:17.080 --> 0:05:20.919 look in longer term, we know were observed across the 0:05:20.960 --> 0:05:26.320 world when you know, society urbanized, when women's education increased, 0:05:26.560 --> 0:05:30.480 that the general trend that the fratility would decline following 0:05:30.600 --> 0:05:35.719 those general social economic development development. We demographers like to 0:05:35.800 --> 0:05:40.279 call this as demographic transition. So yes, one child policy 0:05:40.400 --> 0:05:42.880 had an effect, but if we look at longer term, 0:05:43.200 --> 0:05:47.599 the social economic development probably prayed a more important role 0:05:47.720 --> 0:05:52.680 that maintained China's fratility at a lower level. So let's 0:05:52.680 --> 0:05:56.000 talk about China's population now. At the time the policy 0:05:56.080 --> 0:06:00.000 was introduced, the country's population was just a bit shy 0:06:00.040 --> 0:06:04.279 of one billion. Today it's around one point four billion. 0:06:04.839 --> 0:06:08.440 Where is the population going from here? What's your forecast 0:06:08.520 --> 0:06:14.360 for what is going to happen in the next forty years? Okay, 0:06:14.360 --> 0:06:17.080 so the forecast is very clear. I think the best 0:06:17.200 --> 0:06:20.680 forecast has been done on mostly widely slide of the 0:06:20.720 --> 0:06:25.520 forecast has been the u n S population projection. Basically, 0:06:25.600 --> 0:06:30.279 China's population would turn around in the next ten years 0:06:30.400 --> 0:06:34.040 or so, you know, from positive growth. Right now it's 0:06:34.080 --> 0:06:38.880 getting close to the uh so called zero growth, but 0:06:39.000 --> 0:06:42.040 it will quickly turn around in about ten years, and 0:06:42.200 --> 0:06:46.240 then we will see a very fast job from that 0:06:47.320 --> 0:06:51.039 until in what level might end up at or where 0:06:51.839 --> 0:06:54.520 until we don't know where the end is, you know, 0:06:54.839 --> 0:06:57.120 right now we can only see the job probably all 0:06:57.160 --> 0:06:59.320 the way to the end of this century. But it's 0:06:59.320 --> 0:07:04.000 pretty that India will probably surpass China's as the world's 0:07:04.040 --> 0:07:07.440 most populous nation. Oh yeah, yes, that that that that 0:07:07.640 --> 0:07:11.640 is a done deal because the fraternity and even China 0:07:12.160 --> 0:07:17.480 turned around very quickly that we demographers causes as a 0:07:17.560 --> 0:07:22.520 population momentum. Basically, it takes a generation for the you know, 0:07:22.760 --> 0:07:25.320 the younger generations to get into a productive age and 0:07:25.440 --> 0:07:28.280 for them to reproduce again. You know what, we have 0:07:28.440 --> 0:07:33.080 already saying that Chinese population in terms of a cohoscide 0:07:33.160 --> 0:07:38.760 decline has been there for the last twoty some years now. 0:07:38.880 --> 0:07:44.600 Professor in China changed the one child policy to a 0:07:45.040 --> 0:07:49.200 two child policy, meaning people were officially or everybody was 0:07:49.240 --> 0:07:52.680 officially allowed to have two children instead of just one. 0:07:53.120 --> 0:07:57.480 Has that affected any of the population projections or caused 0:07:57.520 --> 0:08:01.840 people to have more children? Uh? Not much. So the 0:08:01.920 --> 0:08:06.320 hope was by relaxing this policy, more people will have 0:08:07.160 --> 0:08:12.480 a second child and increasing the fraternity overall and basically 0:08:12.560 --> 0:08:17.800 turned around the population trajectory. Unfortunately, you know what, do 0:08:17.880 --> 0:08:21.080 the numbers are now in that the two sounds seventeen 0:08:21.160 --> 0:08:24.080 we did not see a major increase. Actually comparing to 0:08:24.200 --> 0:08:27.600 two sounds sixteen, we saw a decline in total number birth. 0:08:28.800 --> 0:08:33.240 So given that trend and given you know that all 0:08:33.280 --> 0:08:37.559 the other major chance in China including urbanization and increasing 0:08:37.600 --> 0:08:42.280 women's education label for participation all those things. I don't 0:08:42.320 --> 0:08:46.320 say any time soon that China's fratility will bump all 0:08:46.360 --> 0:08:50.200 the way above the so called replacement level, So that's 0:08:50.240 --> 0:08:53.080 not really having any effect. And we had an article 0:08:53.080 --> 0:08:57.160 on Bloomberg recently that China is considering ending even the 0:08:57.240 --> 0:08:59.760 two child policy and allowing families to have as many 0:09:00.000 --> 0:09:03.760 alternate as they want. If that happens, will that have 0:09:03.840 --> 0:09:07.440 any effect or or basically none like the previous changed it. 0:09:08.280 --> 0:09:10.880 So you know, we will see on the two sides. 0:09:11.040 --> 0:09:13.920 One on one side, because China is a big country 0:09:14.120 --> 0:09:16.960 with one point for a billing in terms of number bus, 0:09:17.040 --> 0:09:18.959 that should have have an effect. That's so that the 0:09:19.160 --> 0:09:22.920 policy is the new policy would increasing the opportunity for 0:09:22.920 --> 0:09:25.319 a family to have some family to have three even 0:09:25.360 --> 0:09:29.000 focuss but overall on the macro level in terms of 0:09:29.040 --> 0:09:32.160 total frateritory rate or the total number bus at the 0:09:32.480 --> 0:09:35.959 entire country level, it should not and I don't anticipate 0:09:36.160 --> 0:09:41.040 any major impact at least in the near future. Wow, 0:09:41.600 --> 0:09:45.440 So what will happen to China's economic growth if the 0:09:45.559 --> 0:09:49.839 population does start to decline like the u n IS forecasting. 0:09:50.200 --> 0:09:53.360 The country has been reporting GDP growth of close to 0:09:53.440 --> 0:09:57.240 seven percent a year in recent years, is that going 0:09:57.360 --> 0:10:01.760 to go down significantly? So I'm kind of I'm not 0:10:01.840 --> 0:10:05.400 an economist, it's it's always kind of fascinating and interesting, 0:10:05.440 --> 0:10:09.200 intriguing at least to me. That why we like to 0:10:09.280 --> 0:10:13.520 connect fratility directly to the economic growth. To me, it's 0:10:13.600 --> 0:10:17.760 a more secondary, maybe tertiary thing. But indeed, if we 0:10:17.840 --> 0:10:20.920 look at longer term this, you know, building up of 0:10:21.080 --> 0:10:27.800 fraturity low faturity would lead to eventual decline of growth rate. Partly, 0:10:27.960 --> 0:10:30.839 we know the population requires the label for us new 0:10:30.920 --> 0:10:35.600 labels coming into the market. Partly, and more importantly, it's 0:10:35.840 --> 0:10:40.480 the aging population. Right now, China is setting its retirement 0:10:40.480 --> 0:10:45.040 age at fifty five for women and sixty uh for men, 0:10:45.240 --> 0:10:49.560 and with data population continue to increase, that will create 0:10:49.760 --> 0:10:53.680 a huge drag for the entire economy. Do you think 0:10:53.800 --> 0:10:58.719 that might cause China to open up its borders much 0:10:58.760 --> 0:11:02.160 more to allow more grants or migrant workers to come 0:11:02.160 --> 0:11:05.840 into work in the country or live there. And it's 0:11:05.880 --> 0:11:11.680 I think given the China size, migration probably will not 0:11:11.960 --> 0:11:16.400 be considered as a priority for Chinese party makers. But 0:11:16.640 --> 0:11:21.839 China is indeed try to entice certain selective migration entire 0:11:21.960 --> 0:11:26.040 certain population to migrante into China. More likely China will 0:11:26.160 --> 0:11:30.200 have to relax its retirement age or delayed through time 0:11:30.200 --> 0:11:34.800 and age, oh train its population to into certain segments 0:11:34.840 --> 0:11:38.200 of the labor market. Now, just going back to the 0:11:38.200 --> 0:11:41.120 one child policy for a moment, I lived in China 0:11:41.200 --> 0:11:44.120 for three years, and it's quite something to see a 0:11:44.160 --> 0:11:48.719 whole generation of people that have grown up without siblings 0:11:48.760 --> 0:11:53.360 as only children. How has the policy, or just the 0:11:53.400 --> 0:11:55.679 decline in fertility, if you want to put it that way, 0:11:55.720 --> 0:11:59.360 how has that affected Chinese life and culture in the 0:11:59.440 --> 0:12:05.040 last forty years. I think this is more fundamental, you know, 0:12:05.200 --> 0:12:10.120 in terms of social change to Chinese social psychology and 0:12:11.120 --> 0:12:17.240 social sense. Who Chinese individuals are connected to families and 0:12:17.360 --> 0:12:21.640 other people, and we now see that not just you know, 0:12:21.679 --> 0:12:24.800 this probity, not a fact of the mentality that's thinking 0:12:24.880 --> 0:12:28.040 of the younger generation. It also affects is the older generation. 0:12:28.160 --> 0:12:32.360 How they So for example, I hear people talking about 0:12:32.640 --> 0:12:36.920 now I mean retirement age. My responsiblity to my grandchildren 0:12:37.240 --> 0:12:41.160 is not as of the older thinking. It's my responsiblity 0:12:41.200 --> 0:12:44.400 to raise the third generation. They want to live there 0:12:45.040 --> 0:12:49.319 more useful retirement life. So that's very, very different scenario 0:12:49.400 --> 0:12:52.800 than whether we you know, the stereotypical of Chinese family. 0:12:54.000 --> 0:12:57.920 It really is a remarkable change that has happened in 0:12:58.360 --> 0:13:01.360 Chinese society over the last for you to fifty years, 0:13:01.760 --> 0:13:06.360 Professor Side, one more question. Fertility is not just a 0:13:06.400 --> 0:13:09.920 long term driver of economic growth, but you know, it's 0:13:09.960 --> 0:13:12.320 something that you can also look at that can even 0:13:12.360 --> 0:13:17.080 show whether a recession is coming. Is that is that right? Yeah? 0:13:17.120 --> 0:13:19.680 So you know, that's a very very good example. In 0:13:19.720 --> 0:13:25.960 the United States, the fertility decline into solvesand seven preceded 0:13:26.120 --> 0:13:29.720 the recession of two thousand seven two soldand eight. So 0:13:29.800 --> 0:13:33.160 that says something because it takes ten months to conceive 0:13:33.240 --> 0:13:36.160 a baby, so that means the families and the mothers 0:13:36.280 --> 0:13:41.280 knows quite a bit about economy before the recession even hit. 0:13:41.840 --> 0:13:44.640 That's a great example. It's definitely something that we could 0:13:44.679 --> 0:13:48.480 be watching to see when the recession will come or 0:13:48.520 --> 0:13:52.560 when a recession will happen in any country. Professor cy 0:13:52.640 --> 0:13:55.120 Young of the University of North Carolina, it's been a pleasure. 0:13:55.160 --> 0:13:57.200 Thank you so much for being with us on Benchmark. 0:13:57.840 --> 0:14:10.880 Thank you. Benchmark will be back next week. Until then, 0:14:11.040 --> 0:14:14.120 you can find us on the Bloomberg Terminal bloomberg dot com, 0:14:14.120 --> 0:14:18.160 our Bloomberg app, and podcast destinations such as Apple Podcasts, 0:14:18.280 --> 0:14:21.680 Spotify or wherever you listen. We'd love it if you 0:14:21.760 --> 0:14:24.400 took the time to rate and review the show so 0:14:24.480 --> 0:14:27.520 more listeners can find us. You can also follow me 0:14:27.640 --> 0:14:32.119 on Twitter at Scotland. Benchmark is produced by Toper Foreheads. 0:14:32.360 --> 0:14:36.280 The head of Bloomberg Podcasts is Francesca Levy. Thanks for listening, 0:14:36.400 --> 0:14:37.240 See you next time.