China To Relax 'Two-Child' Policy Amid Social Implications Scare

China says it will be careful in relaxing its birth policies for fear of harming social stability, policy sources said.

It said this even as the latest census highlights the urgency to address the country’s declining birth trends and aging population.

Expectations for birth policy reforms are rising after the 2020 census last week showed China’s population grew at its slowest in the last decade since the 1950s as births declined and aging accelerated.

A fertility rate of 1.3 children per woman in 2020, on par with aging societies like Japan and Italy, underscores the risk for China.

China, the world’s second-biggest economy, may already be in irreversible population decline without having first accumulated the household wealth of G7 nations.

Top leaders are working out a broader plan to cope with demographic challenges, the sources said, including more effective ways to encourage childbearing by easing financial burdens on couples, rather than simply removing birth curbs.

Raising the retirement age, which Beijing has said will be done gradually, will help slow a decline in the workforce and eventually ease pressures on the under-funded pension system, they said.

China introduced a controversial “one-child policy” in the late 1970s but relaxed restrictions in 2016 to allow all couples to have two children as it tried to rebalance its rapidly aging population.

The change, however, failed to halt declining births.

The sources said they expect Beijing to encourage more childbearing under the current policy framework, before fully lifting birth restrictions over the next 3-5 years.

They added that removing birth restrictions could have unintended consequences: a limited impact on city dwellers, who are reluctant to have more children due to high costs, while rural families could expand faster, adding to poverty and employment pressures.