The third child policy will not only fail to save China, but it signals a trend present in all the economies of East Asia: population aging. In publishing the results of a demographic survey, Moody’s doesn’t mince words. For the rating agency, the ever-increasing age of people could pose a risk to economic growth and, in the case of China, become a major burden on state coffers. A reduction in the active population will also lead to a loss of competitiveness on the labor market for the whole area.
In China, the reform in force since May 31 could partially alleviate these economic repercussions, but it will probably fail to save the birth rate that has been declining for years. Also important will be advances in the fields of artificial intelligence, logistics and biotechnology, in which the Dragon excels. “Tackling population aging, especially during late stages of development, will make the challenge even more difficult for governments,” said Martin Petch, Moody’s executive for Singapore.
The situation is even worse for Thailand, whose dependency index, ie the ratio between people of inactive age and those of active age (from 14 to 65), will increase by 9% by 2030. Then there is the experience of Japan, where the pension reform and investments in childcare have allowed greater participation in the world of work for women, but where the average age remains the highest in the world, against a fertility rate among last places.
The decision to allow married Chinese couples to have up to three children, launched by the Politburo chaired by Xi Jinping, was prompted by a dramatic drop in the birth rate of the most populous country in the world. The reform follows a long tradition of family legislation, which has the most famous example in the “one child policy”, enacted by the government of Deng Xiaoping in the early 1980s. In 2009, couples of parents born as only children were allowed to have two children. Since 2016, Xi’s party has extended this permit to all Chinese families. The reform launched on May 31, however, has aroused mixed reactions among the population. In particular, there are those who argue that it cannot mark a real turning point, and those who expect greater support measures to combine family and work life.