Sunday, April 06, 2008

China's population policy: Blessing or Nemesis

China, home to the world’s largest population has done a commendable job in reining its once alarming population crisis through concerted efforts to promote holistic family planning and enhancing the quality of health & education of its people. A two fold reduction in birth rate, a four fold reduction in natural growth rate, implementation of a 9 year compulsory education program leading to marked improvements in literacy, universal access to the public health ystem, emancipation of women on professional and social fronts, flexible schemes to support the retired and the aged together with enhanced awareness and international endorsement of the Population and Family planning program are some of the highlights of China’s untiring efforts towards solving the problem of population and development.
With the advent of the 21st century, China is gearing up to formalize a set of targets & principles and is charting a plan of action augmented by guarantee measures to sustain its positive drive to control population while improving the quality of life in general. Important targets include sustainable development to improve the economic conditions of people, setting goals to limit population and maternal / infant mortality rates, close coordination between the legal, educational, economic and administrative frameworks to help facilitate the better utilization of resources and thus result in anthropocentric form of development. The important steps to achieve the set targets include promoting family planning with emphasis on information, education and communication along with developing industries related to reproductive health, disseminating knowledge on child bearing and caring, better health education among farmers and women, continuation of the 9 year compulsory education program to expand to middle school and higher learning, raising the people’s ideological and moral standards, safeguarding children’ and women’s rights in the social, political and the cultural spheres, optimizing labor resources, steps to reduce poverty in the rural and urban areas, providing better facilities to the elderly and improving the ecological environment to alleviate human settlement. An improved legal system, better incentives to promote family planning, intense publicity and education, developing a robust scientific and technological backbone, better policies to improve money input and actively involving the non governmental and mass organizations are some of the guarantee measures planned.
While China’s population and development policy is all set to meet with stellar success given the disciplined approach that is being taken I would like to draw your attention to the mainstay of today’s Chinese economy. Cost effective manufacturing due to availability of cheap labor fulfilling the needs of the cost-conscious western world forms the back bone of China’s remarkable economic growth. The current population and development policy is bound to have a two pronged effect on the Chinese economy.
1. Firstly China is bound to face a noticeable shortage of manpower with the proportion of youth dropping consistently over the next 25 years vis-à-vis other countries like India. This may result in China faltering on its core-competency of “abundant” low-cost labor.
2. Secondly the reduction in population coupled with the marked improvements in the quality of people’s life will increase the bargaining power of its labor force which over time will no longer be willing to settle for the “low wages” it traditionally earned. This will lend another blow to the China’s ability to satiate the low-cost production aspirations of the world which is currently out-sourcing its manufacturing to China thereby weakening China’s strong position in the manufacturing domain. One can already notice such effects in the Indian BPO industry which offlate has come under a lot of pressure
due to cheaper alternatives mushrooming in the Philippines and Eastern Europe.
3. This could further snowball into an all round increase in prices of manufactured goods the world over as the goods will no longer enjoy the benefits of cheap labor thereby negatively impact all the consumers.
While undoubtedly the efficacy of China’s population and development policy is well on track to achieve its desired objectives, only time will tell if it proves a blessing or a nemesis to the Chinese and the World economies in the long run.

No comments: