Chinese Cities Combat Low Fertility With High In-Migration

This week's Economist has a very interesting story about the spatial variability in (already low) fertility in China. Sadly, it starts the story with the following quote:

IF DEMOGRAPHY is destiny, as Auguste Comte, a French philosopher, once said, then China has many destinies.

This is sad because it shows that the writers for the Economist don't read my blog, so they don't know the story behind the phrase "demography is destiny," which I laid out more than four years ago.

The story has some sad elements because it reveals that the rural population of China continues to be exploited by the cities. All provinces in China have below-replacement level fertility (see map below), but the rural provinces still have the highest fertility. Fertility is lowest in Beijing, at 0.71 children per woman. Provincial governments handle pensions in China, so those rural provinces that are experiencing migration to the cities are finding that their dependency ratio is rapidly rising (more pensioners per worker), while the cities are replacing the unborn children with rural migrants.

As a whole, China has too few young adults relative to the size of older generations, meaning it will not have enough workers to support its pensioners (or children) properly in the future. But some areas will hit demographic trouble earlier and harder than others, with serious implications for economic growth and regional stability. Wang Feng, of the University of California, Irvine, dubs the problem “the Balkanisation of Chinese demography”.

Unlike in Guangzhou, the national authorities have been slow to recognise the problems of demographic decline. As a result, low fertility, ageing, labour shortages and dependency have all taken on a provincial aspect. The three great cities look relatively healthy, as do Guangdong and Zhejiang, a nearby province that shares some of its features. But provinces with low fertility, declining or ageing populations, and rising dependency are in deep trouble. These include the north-east, Sichuan and Chongqing in the west and several provinces in the third category in terms of fertility, such as Anhui.

The result is a big problem for the national government. Even now, it is having to bail out some provincial pension funds. But the threat is also philosophical. The Communist Party has long sought to narrow economic differences and erase local political distinctions because it is terrified of regional challenges. It thinks the only way to keep China together is to impose strong central control. If it is right, its failure to deal with demographic problems is setting back that cause.

The Chinese government is certainly aware of demographic problems--that is why the one-child policy was implemented in the first place. And it is certainly aware of the common prediction that "China will grow old before it gets rich." At the moment, it may be that government policy under Xi Jinping is to focus in the short term only on getting rich, rather than worrying about how many people are getting old and what that might do to the economy.