| Project Detail |
The overall purpose of the TA is to respond to the challenges of a rapidly aging population, a declining young population, and the resulting demographic pressures by developing a policy framework that addresses the low fertility landscape and enhances gender equality in the Peoples Republic of China (PRC). This is in line with the PRCs policy towards the development of long-term and balanced population development (impact). This will be achieved by developing a context-specific national policy framework that will address the low fertility landscape (outcome).
Project Name Responding to Demographic Pressures by Strengthening the Policy Framework Addressing the Low Fertility Landscape
Project Number 57101-001
Country / Economy China, Peoples Republic of
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
The overall purpose of the TA is to respond to the challenges of a rapidly aging population, a declining young population, and the resulting demographic pressures by developing a policy framework that addresses the low fertility landscape and enhances gender equality in the Peoples Republic of China (PRC). This is in line with the PRCs policy towards the development of long-term and balanced population development (impact). This will be achieved by developing a context-specific national policy framework that will address the low fertility landscape (outcome).
Project Rationale and Linkage to Country/Regional Strategy
The population of older people in the PRC is rapidly growing. Studies predict that the country will move from an aging to aged society by 2027, and the proportion of people aged 60 and above is expected to increase from 18.7% in 2020 to 35.0% by 2050 - turning the population at a fast pace into one of the oldest in the world. At the same time, PRCs fertility rate has been declining over the past few decades. In 2022, it hit the lowest level on record at 1.1 children per woman which is lower than that of many developed countries, such as Japan at 1.4, the European Union at 1.5 and the United States at 1.7. In the main population centers of Beijing and Shanghai the fertility rate is even lower. These rates are far below the globally accepted average replacement fertility level of 2.1% the rate at which a population exactly replaces itself from one generation to the next, without migration. By the end of 2022, the total population reached 1.412 billion, a decrease of 0.85 million from 2021. The UN forecasts that PRCs population will further decline to 1.313 billion by 2050 and below 800 million by 2100. PRC faces the challenges of other countries affected by a demographic decline including South Korea, Japan, Italy, and Greece, along with areas of Eastern and Southern Europe. Demographic decline in the PRC, however, is taking place at a much more rapid pace than many developed countries historically.
As the elderly population increases in proportion to the working-age population the old-age dependency ratio (OADR) is rising, expected to more than triple by 2065. This will continue to increase pressure on the health care systems, pension systems, eldercare services, and other social welfare services, and potentially reduce the funds available for other essential public services. Demographic change will also have significant implications for the PRCs economy. It will reduce labor supply and hence the PRCs potential GDP growth. Population aging could affect labor productivity growth as well, due to its impact on saving and investment, and thus reduce potential growth further. A declining population can also result in lower consumer demand, reduced investments, and a slower pace of economic growth. A smaller pool of young and dynamic individuals might impact innovation and entrepreneurship, which are essential for maintaining global competitiveness. Economic impacts could also slow down the remarkable progress PRC has shown in reducing poverty, lifting 800 million people out of poverty over the past 40 years, almost three-quarters of the global reduction in the number of people living in extreme poverty.
Studies show that in many low fertility countries, individuals are not having as many children as they aspire to have, indicating their inability to realize their full fertility intentions. The reasons behind this are complex and a range of social, cultural, and economic factors are determinants of low fertility. In PRC, in 2020 the fertility rate was an average of 1.3 births per woman but when asked about ideal family size, the average was 1.8 births. It is necessary to consider the multi-faceted context-specific factors at play that prevent individuals from realizing their fertility intentions.
The Government of the PRC has been responding to these challenges by developing national policies and programs. In a reversal of the One-Child Policy, introduced in 1979, Chinese couples have been allowed to have up to two children since 2016, while parents from single-child families have been able to have two children since 2013. In 2021, PRC announced that families would now be allowed to have up to three children (the three-child policy). The Government of PRC has announced a wide multi-sectoral range of supporting policy options including initiatives in affordable childcare services, maternity leave, employment, housing allowances, tax deductions, education, and public messaging. Studies so far show that after a short-term boost in birth-rates for the first two years after introducing the two-child policy, fertility rates and fertility intentions continue to decline.
The TA is aligned with strategic priority 3 (aging society and health security) of the ADB Country Partnership Strategy for the PRC, 2021-2025, which aims to address key challenges in adapting to an aging society. This TA is also aligned with other ADB TAs that are addressing PRCs demographic pressures from various angles, including a TA to develop a national strategy and policy framework on adapting to the aging population, and a TA that plans to strengthen the policy framework for childcare services.
Impact
Policies implemented to support long-term and balanced population development |
