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Contributions from
the Column
Focus
In most countries, populations are ageing
Fast track change: Chinese realities
The urgency of family planning
Small cities will have to carry the heaviest burden
06/2005
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Fast track change
In a single generation, the People’s Republic of China is experiencing developments that took Western Europe 100 years. Birth rates are dropping, life expectancy is increasing and the population has a high percentage of old people. Social security systems to cushion off these changes are not in place yet.
[ By Rina Goldenberg-Huang and Gang Huang ]
The 1.3 billionth inhabitant of China was born in a Beijing hospital on 6 January 2005, to considerable media fanfare. It was a boy. The official population count, however, may or may not be accurate. According to United Nations estimates, many Chinese people are not officially registered and the real population figure is close to 1.5 billion.
In any case, China’s draconian population policy has slowed growth over the last twenty-five years. The government initially welcomed large numbers of children in the years after the Revolution, but, in 1979, introduced its one-child policy. Couples have since been allowed to have only one child each. This policy resulted in population growth dropping from 26 % in 1979 to just 7.9 % in 2002.
Today, the official birth rate is 1.8 children per female, putting China on a par with advanced nations of the West. There probably is a number of unreported births, making the actual figure somewhat higher. However, since life expectancy in China is still increasing and many women are still in their reproductive years, the population will continue to expand until the middle of the century – tentative UNDP estimates suggest growth by an average annual figure of 13 million until then.
Strict birth control
The one-child policy was implemented with rigorous measures. Those who had a second child, not only had to pay a fine but also lost home and employment. What’s more, many pregnancies were ended by a forced abortion. For this purpose, mobile abortion clinics toured rural areas.
The provisions have been relaxed slightly since the mid-1980s. Couples in rural regions may now have a second child if their first child is a girl or is disabled. The one-child policy does not apply to ethnic minorities. In the major cities, more and more exceptions are being made. For example, a couple may have two children if they themselves were single children, and a child from a first marriage no longer prevents a parent from having a second child in a second marriage. Exceptions such as these became necessary because the one-child policy was actually too successful. Official figures show, for example, that Shanghai’s population is in fact shrinking.
It is now becoming clear, particularly in China’s cities, that factors other than government regulations are also curbing the birth rate. In view of the ever-widening gap between rich and poor and rising costs of living, low- and middle-income earners say that they neither want nor can afford more than one child. Well-off Chinese, on the other hand, plan their lives as do people in advanced Western nations, setting a personal limit of two or three children.
In the long run, China’s population will no longer increase and the turning point will probably be reached in two to three decades. However, the government still fears continued growth. At the current rate, China is adding a population equivalent of Japan’s to its people every ten years. For this reason the government sticks to its one-child policy – well aware that this entails problems of its own. For example, there is a wide spread complaint that its strict rules have created an entire society of spoiled single children.
A further effect of the one-child policy is that the natural ratio of males to females has been distorted. Internationally, there are about 105 boys born for every 100 girls. In China, however, 119 boys are born for every 100 girls (and in poor provinces such as Jiangxi or Guangxi the ratio is as high as 138:100). With the advent of the use of ultrasound scan to determine the sex of an unborn child, many pregnant women have had female foetuses aborted. This is, of course, illegal – but the figures speak for themselves.
The desire for a son has deep cultural roots. The teachings of Confucius say that only a son can continue the line of succession. According to tradition, a girl leaves the family home when she marries and, from then on, belongs to her husband’s family. In rural areas, survival itself drives the wish for a boy, because men are needed to carry out heavy farm work.
In 2020, there could be 40 million men in China with no women to marry. Experts warn that this gap could lead to a dramatic rise in prostitution and human trafficking. Therefore, the government is attempting to take counter-measures. A campaign called “Care for girls” is underway in hundreds of districts. It is primarily about educating the public. Banners seem omnipresent with slogans such as “Times have changed. Raising girls is as good as raising boys”. Farmers who only have daughters enjoy a reduction in school fees, free doctor’s visits and, once retired, annual pension supplements of up to 1000 Yuan (100 Euro).
Nonetheless, Chinese sociologists believe that additional measures are necessary in the long term to really convince the population that girls are as valuable as boys. It would make sense to raise women’s salaries to levels of their male colleagues. Doing so is the only way to prove that women’s work is really of equal worth.
Age pyramid turned upside down
On top of creating an imbalance between the number of boys and girls, the one-child policy has also turned the population pyramid on its head. The over-ageing of society is now one of the biggest demographic challenges facing China. When the People’s Republic was established in 1949, the average life expectancy was only 35 years. UN figures show that it has risen to 72. Today, China meets the UN standards for an “ageing society”. The category applies to countries where ten percent of the population is older than 60. Thirty-five years ago, there were six children for every aged person in China. Now the ratio is one to two.
Experts point out that, in China as in the West, the baby-boomers will be reaching retirement age in 15 years. It is estimated that, by 2040, there will only be two working persons for each pension recipient. By the middle of the century, 25% of the population will be older than 60.
In China, the retirement age is currently 55 for women and 60 for men. Many people, however, have been sent into early retirement in the context of staff cuts at ailing state-owned companies. With unemployment increasing in rural areas and, at the same time, millions of young people thronging onto the job market each year, the government is faced with a choice of either dealing with an army of young unemployed people or an army of poor pensioners. The elderly get less priority.
How do these masses of people live after their working life is over? They depend on their savings, or else they are supported by relatives or by the pension plans. Previously, state-run “work units” were responsible for retirement funds and health insurance. However, the “socialist market economy” is dissolving. State-owned businesses are going bankrupt and new private companies no longer give any pension guarantees.
Creating social security
New regulations provide for an old age pension system based on three sources: employers, individual savings and publicly-funded state pensions. Businesses have been under directives for about two years to build up reserves for pension payments. It is recommended that businesses pay between eight and twenty percent of salary costs into a pension fund. An employee should be able to register a claim after fifteen working years. However, reserves have not yet been built up and it remains to be seen whether the system will ever really become viable.
Another problem is the lack of health insurance. Health costs are on the rise in China as in advanced nations and illness in old age is becoming ever more critical. The “National Welfare Fund” is likewise still being set up. It is financed from the sale of shares in state-owned companies, from state holdings and other government funds including tax revenue. The official claim is that the welfare fund had accumulated 130 billion Yuan (13 billion Euro) by the end of 2003. A “White Paper” published in 2004 stated that this fund had provided basic social welfare to 155 million people, for the most part low-income earners and unemployed, in 2003.
There are limits to the effectiveness of the current security net because it does not serve millions of people, such as those who are not in formal employment. That is the case for the overwhelming majority of the rural population. In China, the average annual income per capita is more than $1000. However, the differences between regions are huge. It is estimated that the average income of people in rural areas is approximately $400, but that people in affluent make ten times more. The pensions based on the meagre incomes of the past (between 50 and 70 % of the income), do not keep up with inflation, and certainly not with the new consumer demands created by the economic boom. Many elderly people depend on supplementary incomes from casual work or renting out housing space. There are few opportunities to earn money like that in rural areas.
On top of that, unemployment is growing and, with it, the number of people who cannot expect any social security benefits and who themselves cannot put aside any savings. Seventy per cent of elderly people live in rural areas. The rural population continues to regard children as responsible for providing for the elderly, since there is no reliable social security system. Traditionally those from the older generation live together with their offspring. However, the average family size has been steadily dropping since the 1970s. In the meantime, more and more elderly people are living alone, particularly in the cities, and their isolation and depression have become topical subjects in the media. Where grandparents have traditionally looked after their grandchildren, while parents went to work, there are now four elderly people focussing on a single grandchild.
Experts warn that the government cannot rely on Confucian values such as filial duty towards parents, which requires children to look after the elderly. A recent survey in Beijing found that half of all young people see nothing wrong in putting their parents or grandparents into retirement homes. The need for nursing facilities will increase now that family sizes are shrinking. The number of state retirement homes is limited, however. Government experts warn that the state would need to invest $200 billion to build up a number of old people’s homes comparable to that in Europe or the USA. Thus the authorities in Beijing, Shanghai and Guangzhou have begun asking the population to use their own initiative and to make donations. So far, to little avail.
The National Congress, China’s parliament, issued laws to protect the elderly in 1996 obliging children to take care of elderly family members. There are penalties for neglect and mistreatment, but the enforcement of the laws leaves something to be desired. Zhang Kai, a Beijing lawyer, represents a growing number of elderly people who, for example, are fighting against being forced out of their homes by their children. According to him, the Chinese in general have become much more selfish and society has turned merely profit-oriented.
However, some people also sense business opportunities in demographic change. The private insurance market is booming with many types of insurance on offer, from health to nursing care and life insurance. The majority of retired people are, in spite of various difficulties, better off materially than previous generations. They are slowly being discovered as a specific consumer group in China. For instance, the Hualian Shopping Mall in Beijing now sells “fashion for seniors”.
Migration into cities
Internal migration is another demographic challenge in China. There are 150 to 300 million workers living in rural areas for whom there are no jobs. For years, increasing numbers of people have been moving to the affluent coastal regions. It was estimated that approximately 70 million people were not staying in their actual hometown in 1993. By 2000, the figure had doubled to 140 million.
A tough time is in store for these people. The “drifting people” slave away for twelve hours a day at the minimum wage, six or seven days a week. They seldom have health or accident insurance and they live in simple accommodations, with several people sharing a small room with plank beds and rudimentary sanitary facilities. It is difficult to register and officially control the migrants. Government bureaucrats regard them as a problem of public safety and, increasingly, as a health problem. For example, the spread of HIV/AIDS is typically considered to be linked to migrant labour.
The income that internal migrants send home is vital to the families they have left behind. Up to one fifth of the population of China’s major cities come from poor regions. Without question, the over-ageing in cities as Shanghai would be even more dramatic if not for this migration.
Outlook
China is facing social problems of a huge scale. Average figures actually hide the great differences between rich and poor regions. However, the government has acknowledged the challenges it faces. It is intensively and at several levels working on approaches to solve these problems. Since March 2003, a state commission has been analysing the fields of birth control, migration, unemployment and ageing. The commission is coordinating the work of more than 20 departments involved in public safety, health, work and social security benefits. Data banks are being set up and networked.
The government has recognised that the period leading up to the middle of this century will be crucial. During this time, social systems must be set up and population growth must be further capped. The population will peak in the middle of the century and its trend of over-ageing cannot be stopped – nor can migration to rich regions. However, the government is endeavouring to control the situation and taking measures to correct the gender imbalance. China’s demographic development is loaded with social explosives. The regime’s priority is to avoid unrest – or, at least, nipping it in the bud. Its general approach is likely to remain a mixture of political oppression, business laissez-faire and rudimentary social services.
Dr. Gang Huang
is a management consultant.
gang.huang@web.de
Rina Goldenberg-Huang
is a specialist on China and works as a producer for the English service of Deutsche-Welle-Radio in Bonn.
rina.goldenberg@web.de
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