“There are two ways to approach this problem. One way is to loosen birth control, which may help, but even if controls are completely relaxed, it may be difficult to reverse the trend.” said Zhang Zhiwei, chief economist at Shanghai-based Pinpoint Asset Management Co.
“From an economic policy perspective, another way to respond is to make industry more dependent on other sectors.” Zhang Zhiwei added.
The Communist Party’s economy has been heavily dependent on industries that require a lot of cheap labor, such as manufacturing, but rising worker wages have made mainland China’s factories less attractive. At the same Time, workers need to be more highly skilled in order to be more innovative.
The bigger problem for mainland China is one fueled by an aging population: slower labor productivity growth, said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, a French foreign trade bank. She is watching for more growth in capital-intensive industries in mainland China, which are relying more on automation.
David Dollar, an economist at the Brookings Institution, a leading U.S. think tank, said one way to overcome a shrinking workforce is to rely on the power of technology to rapidly increase automation, but to reconcile the actual changes in automation with the decline in the workforce is a challenge. But reconciling the actual changes in automation with the reduction in the workforce is a challenge.
Overall, the easing of fertility policies will not have much of an impact on the economy, said Dan Wang, chief economist at Hang Seng Bank in mainland China.
According to data from the Communist Party’s National health Commission, births in mainland China have been declining every year for 16 years. Even if a second child is allowed, Epidemic and economic factors make it unaffordable for mainland Chinese families, and the high cost of housing and Education in mainland China deters people from having children.
According to an analysis of a report by the Communist Party’s Public Security Bureau, only 10 million births are expected in mainland China in 2020, a 15 percent drop from 2019.
“Mainland China’s low fertility rate is a reality, it is real, and it will continue.” Cai Yong, an associate professor in the Department of Sociology at the University of North Carolina (U.S.), told The Wall Street Journal.
On whether to have another child, a 32-year-old mainland Chinese mother who already has a 3-year-old told The Wall Street Journal, “We hesitated for many years, and I think we finally made up our minds that one is enough.”
The Chinese Communist Party is trying to reverse the damage caused by the new coronavirus pandemic, but a shrinking workforce could eventually be a serious setback.
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