The unforeseen consequences of the one-child policy

Savings, education and gender equality.

(Publicado originalmente en catalán en el Diari ARA el 28/07/23)

This summer, by the poolside with a beer in hand, I started reading The New China Playbook by economist Keyu Jin from the London School of Economics. I believe Jin's book is the best introduction to the Chinese economy ever written. It answers key questions that many people have: Is China capitalist or communist? Why do the Chinese save so much? How did China manage to go from a destitute economy to a global powerhouse?

However, the part of the book that interested me the most analyzes the unforeseen consequences of the one-child policy: according to Jin, this birth restriction policy has had extremely profound effects that have shaped China's economy, society, politics, and international relations. We are still experiencing and will continue to experience its effects.

When discussing the macro consequences of the one-child policy, the focus is usually on China's current demographic decline. But according to Jin, the most fundamental impact was the massive increase in Chinese families' savings resulting from this policy. Let me explain: in traditional Chinese society, it was assumed that children would financially support their parents in old age. With the one-child policy, Chinese parents went from having economic support from multiple children to only one child. To compensate for this change, they began to save more.

Family investment in education also increased: if they could only rely on one child to support them in old age, it made sense to maximize that child's potential by providing them with a good education and ensuring they got a well-paying job. Here, we touch on another key issue: the one-child could be either a boy or a girl. Despite the discrimination against daughters in traditional China, the one-child policy forced parents to invest equally in the education of their daughters and sons (with only one descendant to rely on for support, there was no room for gender discrimination). On the other hand, mothers, having only one pregnancy and child to care for, had more time to dedicate to the workforce. As a result, grown-up daughters have more negotiating power when it comes to choosing a partner for marriage (in a country where there are more men than women).

The impacts of this policy are still being felt today. Jin points out that the high savings rate (low domestic consumption, hence massive exports) has contributed to the trade imbalance and tensions with the US. The increase in educational levels has produced a new generation that is turning China into a technological powerhouse. The new educational opportunities for girls have led to a rise in the percentage of female entrepreneurs. In the case of Chinese high politics, where men still overwhelmingly dominate and leadership transitions occur strictly along generational lines, we will have to wait a few decades. However, Jin is confident that, just as it has happened in the private sector, we will see many top female leaders in the Communist Party in the future. The one-child policy will have its greatest political impact in the coming decades when the generation born under it comes to power.