Effects of One-Child Policy in China's Economic Development (Coursework Sample)

Effects of One-Child Policy in China’s Economic Development
Name
Institution
Table of Contents
Abstract 3
Introduction 4
Literature Review 6
Summary 7
Methodology 7
Analysis 8
Population growth 8
The working age population 8
The age dependency ratio 9
Demographics 10
Conclusion 13
References 15
Abstract
The paper analyzes the economic impacts of the one-child policy in China. The policy was established in 1980 and has been in use until the government ceased to be centrally planned by introducing the two child policy. The one child policy substantially paralyzed the labor market because of the decreased growth in the Chinese population. The number of individuals leaving the workforce was increasing compared to new workers entering the workforce. The paper draws its study through analyzing secondary sources presenting previously conducted studies. Various graphs have been shown to elaborate the different changes experienced by China particularly in the working age, demographics, age-dependency ratio and population growth. An analysis of these graphs proves both the detrimental effects and merits of the one-child policy to the economy of China.

Effects of One-Child Policy in China’s Economic Development
China suffered a severe increase in its total population in 1979, and as a result, Deng Xiaoping who was the leader of the communist party of China introduced an anti-natalist policy referred to as the one-child policy. The policy’s aim was to decrease the crude birth rate and the overall fertility rate for China to have slow population growth. The one-child policy of China has depicted the government of China as coercive and invasive. Having such a centrally-planned economy promoted China’s ability to look into the future. However, this policy has stimulated the slow down development of the Chinese government (Sudbeck, 2012). It created a demographic wave that began crashing the economy. In any economically growing country, the three primary sources of growth include capital, labor, and productivity. The labor-driven growth results from having more workers in an economy. The capital-driven growth results from the deployment of more equipment while productivity-driven growth originates from the squeezing more output from the prevailing capital and labor. This one-child policy was, therefore, detrimental to the growth of the workforce. The era of continuous supplies of young and cheap Chinese labor was over with the introduction of this policy (Choukhmane et al., 2013). The businesses no longer relied on China’s supply of cheaper labor and would find other regions where businesses would make more money.
Additionally, China will have a difficult time in growing the national output following the decreased number of the available workers, the old age pensions and the augmenting healthcare costs of this aging population. In the next years, the numbers of workers leaving the workforce would be more than those entering the economy. Statistics depict that by 2035, twenty percent of the Chinese population is expected to be aged over sixty-five years. The youth entering the workforce who will invariably be children will be already complaining of the pressures to look after their aging parents (Hesketh et al., 2005). Notably, the policy has led into the country have a debt-fueled investment binge that has resulted in the misallocation of capital creating significant excess capacity. For instance, the number of households has been affected and that of home buyers significantly reduced. All these shifts can be partially attributed to the one-child policy. Massive investments to stimulate the economy can lead to a painful landing in the future particularly in the face of overcapacity. On the other hand, factors such as urbanization can drive productivity. Studies on China show the potential migration-fueled growth. However, much of the urbanization has already occurred with the country defining an urban region to have a population density of 1500 people per square kilometer. Moreover, the age band that is likely to migrate is between sixteen and twenty-four years old, and this band has decreased by twenty-five percent between 2010 and 2015.
The goal of this paper is to delve further into the economic effects of the one child policy to China. The status of China’s economy as a super power can be attributed to a variety of factors such as technology, markets, capital and the cheap labor. The technology and capital were acquired through overseas investment while markets of exports emerged through the increased demand for foreign consumers such as the United States. The country, however, had cheap and productive young labor contributing to its economic strength and success. Nonetheless, the launch of the one-child policy led to the nation losing one of its greatest assets. Nevertheless, there have been arguments of the policy still contributing to economic growth during the first few years of its introduction. Some of the arguments suggest that lower fertility can lead to a higher level of education of a child and can raise the parental supply of labor. Furthermore, it can enable parental relocation hence promoting the rearrangement of the workforce from the rural areas to town regions (Yu, 2008). Notably, the study is important because it will reflect China’s demographics, the increasing age dependency ratio, the shrinking working age population, and the slowing of population growth. All these economic effects can be attributed to the one child policy both partially and entirely.
Literature Review
According to Hesketh et al., the one-child policy has had significant effects on both the livelihood of a quarter of the globe’s populace and the Chinese economy. Since its establishment, the policy has promoted a reduction in China’s total population. The policy can be termed to be partially responsible for the reduced total fertility rate. The policy has also affected the sex ratio in China. The sex ratio at childbirth ranges from 1.03 to 1.07 in the developed nations. Furthermore, the Chinese culture of preferring males to females has promoted the infanticide of girls. The sex imbalance has brought social consequences to the Chinese government. The decrease in the numbers of women could augment the mental health problems while men may develop disruptive social behavior (Hhesketh et al., 2013). Therefore, these men become incapacitated to marry and bring up a family. Some of the effects accompanying the scarcity of women include abduction and human trafficking of women for marriage. Other factors include the rise of prostitutes with a likely increase in the spread of HIV infections and other sexually transmitted diseases. Therefore, these consequences could be a significant threat to the future stability of China.
According to Yu, the one-child policy has forestalled 300 million childbirths since its establishment in 1979. Birth rates need to be inversely related to the saving potential of a country. Research has found dependency rates and saving rates also to be contrariwise linked. This concept can be explained in the aspect that children have a hefty charge on consumption expenditure hence reducing the saving potential. Therefore, low dependency ratios are likely to lead to higher saving rates. Demographic shift and economic take-off are related aspects of the analysis of the real GDP per capita of China (Yu, 2008). China’s economy escalated in the 1980s with the country taking only ten years to double its GDP per capita. The country’s ratio between the working age and the non-working has also risen positively affecting the domestic savings rates. These domestic savings are highly correlated with the domestic investment that enables a country’s accumulation of capital for economic take-off.
According to Choukhmane et al., the one child policy was established to control population growth with one of its consequences being a decrease in the general fertility rate. The policy has led to China having higher household saving rate compared other countries. For instance, between 1983 and 2011, there was a twenty percent rise in China’s urban saving rate (Choukhmane et al., 2013). The exogenous fertility restrictions in China could have increased the household saving rate through the alteration of the saving decisions at the household level and changes to income and demographic arrangements at the collective level.
Summary
The one-child policy has left a long-term impression in China. Many families have adjusted to the small families even with the introduction of the two child policy. Families have adapted to urban living and higher consumption levels. However, China’s aging population has resulted in a demographic handicap because of the declining numbers of the working-age population. Less GDP is therefore generated and may put a strain on the social expenditures that count on sluggish tax revenue.
Methodology
To comprehend the economic impacts of the one-child policy specifically to China’s social and economic development, several analyses have been conducted. The changes in demographics and China’s economy will be studied utilizing data from various secondary sources. The impact of the policy on the Chinese economy will be presented and explained using different graphs.
Analysis
Population growth
The increase of population calculated as the crude death rate subtracted from the gross birth rate has decreased from approximately 15 per 1000 people in 1998 to below 5.5 per 1000 people currently. The graph below depicts the effect of population growth on the labor force. The continuous decrease in the number of individuals implies a reduction in labor supply to the economy, therefore, affecting the country’s national output.
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