Why has China introduced a three-child policy?

Beijing encourages married couples to have third baby to address looming economic crisis of ageing population in latest easing of controls introduced more than 40 years ago

Children play at a kindergarten in Yantai, Shandong, on 31 May 2021 (AFP/Getty)

China has announced the end of its two-child policy, permitting married couples to have as many as three children for the first time in over 40 years.

Beijing’s state-owned Global Times newspaper reported that the decision was reached at a Chinese Communist Party politburo meeting with the country’s president Xi Jinping and was being introduced as part of the government’s “strategy of actively coping with an ageing population”.

“Supportive measures” will also be implemented to bolster the policy, the paper said, including lower educational costs for families, increased tax and housing support, a guarantee on the legal interests of working women, a clampdown on “sky-high” dowries and increased efforts to educate young people “on marriage and love”.

The national retirement age would also be delayed to support the workforce, the paper said.

Although China is home to 1.41 billion people – making it the most populous nation in the world, narrowly ahead of India – a once-in-a-decade census revealed this month that its population was growing at its slowest rate since the 1950s, with data showing a fertility rate of 1.3 children per woman for 2020 alone, on a par with other ageing societies like those of Japan and Italy.

That falls far short of the roughly 2.1 needed to hit replacement levels, posing a major threat to the economic development of one of the world’s wealthiest industrial superpowers.

In 1979, China had exactly the opposite problem and introduced its strict one-child policy to rein in growth and prevent an unmanagable population explosion.

Beijing imposed a system of fines for couples who disobeyed the law and even enacted coerced sterilisations and sex-selective abortions, which created a significant gender imbalance as many parents preferred male children.

That draconian measure was finally relaxed in 2013 as the problem of the country’s ageing workforce became apparent, with the state allowing couples to have a second baby in the event that at least one of the two parents was themselves an only child.

The prohibition on second babies was scrapped entirely in 2016 but appears to have failed to solve the problem so far, according to the census carried out by China’s National Bureau of Statistics, which continues to find the birth rate in decline since 2017.

A study published earlier this year by academics from Hangzhou University found that the two-child policy had encouraged wealthier couples who already had a child and were “less sensitive to child-rearing costs”, while simultaneously driving up the costs of childcare and education and discouraging first-time parents.

“People are held back not by the two-children limit, but by the incredibly high costs of raising children in today’s China. Housing, extracurricular activities, food, trips, and everything else add up quickly,” Yifei Li, a sociologist at NYU Shanghai, told Reuters.

“Raising the limit itself is unlikely to tilt anyone’s calculus in a meaningful way, in my view.”

The policy shift was met with a more positive response by Shuang Ding, chief economist at Standard Chartered in Hong Kong, who said: “This is without a doubt a step in the right direction, but still it’s a bit timid.

“A fully liberalised birth policy should have been implemented at least five years ago, although it’s better late than never.”

A poll on the Weibo account of China’s Xinhua news agency asking users “#AreYouReady” to have a third child as part of the policy appeared to reveal the problem as generational and cultural.

About 29,000 of the 31,000 respondents to the survey said they would “never think of it” while the remainder were split between: “I’m ready and very eager to do so”, “it’s on my agenda", or “I’m hesitating and there’s a lot to consider”.

One user wrote: “I am willing to have three children if you give me 5 million yuan ($785,650).”

The poll was later removed.

Additional reporting by agencies