|Rozelle: After the end of the one-child policy, the main drivers have been the increasing cost of having—and educating—children and now the decreasing need for them in rural labor.
In urban areas, it’s very expensive to raise kids, who haven’t historically been so essential to family economies there as they have been in rural areas. But in rural areas, you don’t really need kids to farm anymore. Chinese farming is almost totally mechanized now. So while the government in Beijing ended the one-child policy eight years ago, the incentive to have more children has actually diminished since.
Rural parents, meanwhile, now tend to want their kids to be educated and to end up working in an off-farm sector. Which means a high-school degree, ideally a college degree, and ultimately a white-collar job. Which in turn means incurring some of the considerable expense urban parents experience in educating their children. And which ends up meaning that more rural parents want fewer kids—to be able to focus as much of their resources as possible on those they have.
Valentine: How do you understand the impact of these demographic changes?
Rozelle: They certainly raise a lot of questions. The most obvious is, are there going to be enough people in the labor force? Now, I expect that in an era when we’re seeing more and more applications of robots, automation, artificial intelligence, and so on, we’ll plausibly end up seeing less and less need for human labor across sectors—in construction, for example, or manufacturing. We know technology is going to affect the demands on labor in these industries drastically. But exactly how is a question.
A deeper question is how China is going to develop economically overall—specifically, how high Chinese incomes will get in terms of GDP per capita by the time today’s working adults become elderly. China has a very, very weak social-security system, and taking care of the elderly is the main thing they need it for. So with an ongoing population decline, supporting that system will depend on driving GDP per capita up.
There are related questions about what China’s global stature will look like over the same time span: What will Beijing be in a position to spend on military expansion? What will it be in a position to spend on its Belt and Road Initiative?—the global infrastructure-development strategy it’s used to enhance its influence around the world. If you look at what China spent on Belt and Road in 2022, it’s already about a tenth of what it was three years prior.
But the biggest issue these changes are driving is the biggest problem China has that no one outside the country really knows about—a widening gap in what social scientists call human capital between urban and rural children.
In plain terms, this means two things: One is that China’s education system isn’t adapted to the challenge of preparing rural kids for life off the farm; it’s not training them for the emerging economy. But more fundamentally, rural Chinese families aren’t adapted to preparing their kids for the challenge of integrating into the education system in the first place.
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