Scott Rozelle is an American development economist, a researcher at the Freeman Spogli Institute for International Studies at Stanford University, and the director of the Institute’s Rural Education Action Program, who’s spent several months a year working in rural China over the past four decades. To Rozelle, what’s happening to the country’s population will inevitably bring a number of clear challenges, at home and abroad—not least in Beijing’s economic capacity to care for an aging generation with fewer children. But “the biggest problem China has that no one outside the country really knows about” is most directly confronting its younger generations—in the more remote areas where the majority of Chinese people live. And in time, Rozelle says, their problem will be China’s.

Scott Rozelle: We know it’s real and serious. Birth and fertility rates are falling fast—birth rates being births per thousand people; fertility rates, births per woman of childbearing age, which is a clearer indicator of what’s going on. And looking at the World Bank‘s numbers, the overall fertility rate in China is down from about 1.7 to about 1.3 in six years.

But then there’s the question of where it’s happening. Western press coverage tends to focus on the urban picture: Most urban families have one kid; many have none. Of course, this is a big part of the picture as a whole. But the majority of China’s population isn’t falling in the cities; it’s falling in rural areas.

More than 60 percent percent of babies in China are rural babies. And in rural China, the fertility rate is down to about 1.5 from about 2.5 just 10 years ago.

My research group, the Rural Education Action Program out of Stanford, does a lot of work on rural families, and if you look at a typical sample of them, around 65 percent have two kids; 30 percent have one kid, without planning to have another; and around 5 percent have three kids or more—very few anymore.

At the same time, there was a longstanding historical preference among rural Chinese families for having boys to work on the farm, and that’s almost entirely disappeared. It’s true that there’s still a certain cultural bias favoring boys, but people are increasingly happy with girls too. When you speak with a family that has two girls, you’ll often hear, It’s great, we’ll never have to pay a bride price!—the ceremonial tradition of a groom’s family paying his fiancé’s.

Now, I don’t know what the bride price is going to look like 20 years from now, as the greater number of girls in the population get to marrying age. But these days, the bride price is very, very high—on account of the sex-selection problem from 40 years ago: Between 1980 and 2015, China imposed a one-child policy across the country, which brought an era of sex-selective abortion that skewed the rural population as a whole significantly male.

Valentine: So what’s driving the fall in rural fertility rates now?

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.

“What we find across the country—and it doesn’t matter if it’s East China, or Central China, or West China, or the semi-rural areas around big cities—is that there’s a huge problem with cognitive development among rural kids. It’s nothing genetic, and it has almost nothing to do with nutrition. It’s mainly the result of a psycho-stimulated parenting problem.”

“They’re cognitively delayed essentially because their parents—who love them and want them to go on to college and a good life—are still raising them as if they were raising a farmer. So they make these kids strong, they make them hardy, and they think, When my child gets into school, they’ll start to learn what they need to know there. But kids’ early stimulation is such an important part of their development, and rural parents simply don’t know how to support this for the world they want to send their children into.”

“That may not be a problem from Beijing’s perspective as long as they end up putting these kids to work in an iPhone factory. But those jobs won’t last. And in any event, they won’t help China become the kind of high-skill, high-income society it needs to become if it’s to compensate for its declining population over the next decades. That’ll require creating paths for the emerging population into jobs that depend on knowledge of science and math and computing and so on. The Chinese are now in a position where they need to offset the dropping quantity of human capital with rising quality—and they’re not really doing it.”