The latest issue of China Pulse, the monthly journal of the Confederation of Indian Industries (CII) on Chinese affairs, has picked up a news item that appeared  in a China daily newspaper some weeks back.
The information contained therein would appear rather innocuous. Yet, its authenticity is hardly in doubt as the daily carrying it is a state-run publication. The report announced a decision by the administration in Guangzhou city, the capital of southern China province of Guangdong, to encourage single-child families in the city to go in for a second child. That such a decision is taken in Guangzhou city is very significant.
In many respects, Guangdong province is the power-house of Chinese economy. It accounts for the single largest chunk of foreign investment China has received over the years. It is by far the richest province and its contribution to the Chinese GDP, at 12 per cent, the highest among all Chinese provinces. And, with a migrant population of almost 30 million driving the economic activity of the province, it has also become the most populous. Why then is the administration asking its single-child families to opt for a second child? Why is the city also taking perhaps the first step towards reversing China’s almost three-decade old single-child policy that has been effective in checking population growth?
It may be rather hasty to conclude that this Guangzhou-specific relaxation of the single-child policy would be extended to other cities across China. Yet, it might as well be the first indication of a shift from the hitherto successful population stabilisation policy, since Guangzhou typifies the direction in which Chinese urban centres are shaping up in terms of economic growth and development.
The report rationalised the decision in terms of the severe difficulties the city administration is confronting in providing old-age homes to a rapidly growing population in the 60-plus category. While the administration has infrastructure to take care of around 40,000 old-age people, the ageing population is estimated to touch the one million mark within the next two years.
The real scenario prompting the move might then be different. China has just recorded the highest GDP growth in 12 years, clocking 11.1 per cent in 2006. The leadership is quite euphoric about the growth rate and is determined to sustain the momentum in the years ahead, in its quest to make China a true global power.
But prognosis by experts in recent years has not been encouraging. Recently, a Hong Kong-based economist posed a question that Beijing has not missed: “Will China grow old before getting richer?” Another economist came up with a statement that is more ominous: “China is ageing faster than any other country in history…The one-child policy is largely responsible for this.”
The population stabilisation policy, enforced with a combination of incentives and punishments, has helped China to rapidly improve per capita income of its people. But on the flip side, it is projected that China’s population in the working-age group of 18-59, would start declining sharply from 2010 onwards. According to one projection, by 2050, only 30 per cent of Chinese population would be in the working-age group while the remaining 70 per cent would be the dependent population of children and old age people.
Coming to comparisons, an aspect an apex industry body like CII would be interested in, at present China’s working-age population is about 230 million more than that of India. But since 60 per cent of India’s population is in the below 25 years age-group, the situation will start changing in India’s favour and by 2050 it is projected that India would have 230 million more population in the working-age group as compared to China!
It would appear that India will reap the benefit of its woefully poor record as regards population stabilisation policy.
Not surprisingly, experts reckon that India could catch up with China on the growth front, though New Delhi has to do a lot to educate its young population to make them “employable” in a highly technology-driven globalising economy and receive an attractive population dividend.
The Guangzhou decision may very well represent the first tentative indication of the Chinese leadership’s willingness to do everything required to sustain high economic growth rates even if that warrants a reversal of its population stabilisation policy. It is driven primarily by increasing shortage of labour force in the booming city that has started affecting the growth momentum.
The Guangzhou pointer would potentially introduce a new element to the competitive and cooperative trends in the Indian and Chinese economies. CII has, therefore, reasons to believe from the evidence of Guangzhou that it is possible that the Chinese leadership could affect similar corrective steps on a much wider scale if the situation so warrants in coming years.
For India, the widely projected economic advantage from a rapidly ageing Chinese population - the much-talked about population dividend at the global level - may not really come, by default.