China Eases One-Child Policy

Concession Comes as Labor Shortage Looms

By LAURIE BURKITT

China is tempering its controversial one-child policy, allowing more couples to have a second child in a surprise concession over a much-disliked control that comes as the country faces a looming worker shortage.

Couples will be able to have two children if one spouse is an only child, according to a wide-ranging Communist Party reform blueprint issued Friday, the most significant adjustment in a policy that has defined Chinese family life for more than three decades and perhaps the most dramatic policy change out of leaders' recent party conclave.

Previous exemptions mainly allowed some rural couples to have a second child and ethnic minorities to have more. Couples consisting of two only children were also exempt. The new move expands exemptions to many more couples, chiefly urban ones who have seen their living standards improve and increasingly chafed under social controls.

The shift comes after years of high-level debates and was greeted by those who have been pushing Beijing for change as game-changing.

"It's a historic moment in the life of this infamous policy," said Wang Feng, a demographer at Fudan University in Shanghai.

He and other experts said Chinese leaders also realized that this reform—which comes amid increasingly vocal criticism of Beijing's handling of a number of social issues—was easier to deliver than concrete change on problems such as poor medical care and pollution that have developed amid the country's breakneck growth.

"This is the only concrete policy change," said Cheng Li, an expert on China's elite politics at the Brookings Institution. For the authorities, he said, "It's a very good story."

However, demographers say the shift, in the document charting China's economic course for the next decade,t comes too late to solve a looming labor crisis in a rapidly aging society.

The document didn't say when the new policy will start, saying only that it would "gradually adjust and improve family planning, promoting the development of balanced population."

There are many people in China like Cui Min, who has long wanted to have several children. "I know how lonely it is to be a single child," said Ms. Cui, a 31-year-old Beijing teacher and the mother of a one year-old girl. "I don't want my daughter to feel the loneliness I did," she said.

Initiated in 1980, the policy was intended to rein in explosive population growth and help raise living standards. In doing so, it also led to a host of problems—abortions and sterilization forced upon women by officials to meet population targets and tiny nuclear families that placed the burden of elderly care on single children.

Mr. Wang and other population experts have argued for several years that the government was running out of time to change course. Birthrates had already fallen, in some cities to levels below that needed to replace the current population. If left unchecked, they said, the labor force would shrink, pressuring wages and inflation, and fewer workers would be taking care of a growing elderly population, potentially creating a pension shortfall.

Companies manufacturing or operating in China have already seen their profits diminish as the supply of labor—seen as China's most competitive advantage in attracting foreign companies to its turf—tightens, pushing up wages.

The predicament has caused experts to wonder if the world's No. 2 economy would grow old before it gets rich. Japan's long slump beginning in the 1990s occurred after a similar dip in demographics, though Japan was far wealthier at the time than China is currently and was able to absorb the slowdown in growth. Population experts said the latest move, while positive, fails to fully steer China away from the demographic crisis. "The entire policy should have been abolished," said Liang Zhongtang, a demographer from the Shanghai Academy of Social Sciences.

China's working-age population—those ages 15 to 64—is drastically shrinking: From 2010 to 2030, China's labor force is expected to lose 67 million workers—more than the entire population of France—according to United Nations projections.

Over that period, the elderly population is projected to soar, from 110 million in 2010 to 210 million in 2030, and by 2050 will account for a quarter of the population, according to U.N. data.

China's population, the world's largest, rose to 1.34 billion in 2010, according to census data. It had been projected to peak at around 1.4 billion in 10 years but decline for the next 30, said Mr. Wang.

Children expected to be born as a result of the policy shift will add modest growth—1 million to 2 million births over the next three years, population experts estimate, starting at least 9.5 months from now at the earliest, and, they won't enter the workforce for another 20 years.

"There's no exact optimum number to add," said Mr. Wang, adding that the maximum 2 million won't be enough to make up for already declining birthrates.

The policy document released Friday didn't explain why the leaders had decided to alter the policy. In March, the government abolished the stand-alone National Population and Family Planning Commission, folding its public health duties into the Health Ministry and giving its population statistical work to the main economic planning agency.

The one-child policy has appeared increasingly out of place in a society where social mobility and individual freedoms have greatly expanded in the past decade. Tired of waiting for change, many better-off Chinese have had second children, either by going abroad to circumvent rules, or by paying hefty fines causing popular resentment and drawing occasional criticism from the government.

The policy drew nationwide public condemnation last year when photos appeared on the Internet showing a fully formed fetus lying in a pool of blood next to its mother, who was forced to have an abortion. The family later agreed to accept more than $11,000 in compensation from the government.

Forced abortions and sterilizations are illegal in China. But local officials sometimes force women to undergo such procedures to meet population targets set by planning officials in Beijing. That has made population controls a lightning rod for Christians and human-rights activists in the West. The issue took center stage in U.S.-China relations last year when blind legal activist Chen Guangcheng, who exposed forced abortions in part of Shandong province, escaped de facto house arrest and fled to the U.S. Embassy in Beijing, later arriving in the U.S.

The ripples of the policy change may be felt as far away as the fields and processing plants of the U.S. Farm Belt, which has already been shipping a growing share of its soybeans, pork and other products to feed China.

Economists said anything that further increases China's population is likely to add to demand for U.S. farm goods. "More children will mean more dairy products and as those children age, meat consumption will rise," said Dan Kowalski, an economist at Greenwood Village, Colo.-based CoBank, which provides loans, leases and export financing to agribusinesses.

Kimberly-Clark Corp. , which makes Huggies diapers, expects most of its growth in China coming from getting mothers to use more diapers during the day rather than waiting for more babies to be born, said Kimberly-Clark's Chief Executive Tom Falk, saying that high expenses are preventing couples from filling their cradles with a second baby.

Even with the right to have more children, recent research on the impact of the one-child policy's various exemptions suggests fewer Chinese want them. The Shanghai government found in a 2012 survey that couples born after 1980 are willing to have only 1.2 children on average. The average number of children born per couple in the city is 0.7, well below the rate of population replacement, according to census data.

Better educated Chinese, like Shanghai bank employee Sun Wei, cite higher costs of living and raising a child as reasons for not having a second. The 28-year-old and his wife are allowed to have another child under the new policy, but likely they won't.

"Having another kid means extra financial pressure," said Mr. Sun. He says imported baby formula, which is considered safer than domestic products, cost 200 yuan per can, eating into his 2,000-yuan-per-month paycheck.

"As the cost of raising a child increases dramatically, people care more about the quality of a child's life, not the number," said Mao Zhuoyan, a researcher at the National Health and Family Planning Commission, which enforces the policy.

Still, many others lament that neither they nor their parents were given this opportunity earlier.

One user on China's Twitter-like Sina Weibo said,

 "So many years later, after a generation under the policy are already dying, then you can have another child."