September 29, 2021

Have you ever achieved a goal in life only to find it’s not what you wanted after all? Have you made great sacrifices — and trampled over other people — to get to somewhere that you don’t in fact want to be? If so, spare a thought for the Chinese Communist Party.

In 1979, they imposed a one-child policy on their citizens. It was brutally implemented. There were forced sterilisations, forced abortions and crippling financial penalties on families with unauthorised children. In some areas, family planning officials — effectively a secret police force — punished non-complying parents by demolishing homes and kidnapping excess children.

It was all for nothing. The long-term population trends would have been similar without Beijing’s campaign of anti-natal terror. Birth rates across East Asia have plummeted, despite the fact that only China had a one-child policy. 

Furthermore, Chinese birth rates have stayed low despite the end of the policy. Worryingly low, in fact. In recent years, the Government hasn’t just eased up on population control, but now wants families to have more children. There was the shift to a two-child policy in 2015 and, earlier this year, to a three-child policy. 

But the biggest sign of panic came this week, when the State Council announced a ban on abortions for non-medical purposes. It was the clearest proof yet that China is hurtling towards a demographic disaster that the Government is desperate to stop.

We can tell that they’re worried because the official figures are so misleading. This is what usually happens when a communist regime has something it wants to hide: whether it’s a poor harvest, inadequate production or mass murder.

Based on government statistics, the World Bank puts the Chinese total fertility rate (TFR) — the average number of children born to each woman over her lifetime — at 1.7. The rate required to maintain population stability is 2 (plus a bit more to compensate for child mortality).

So a TFR of 1.7 is well below the “replacement rate”. However, according to demographers like Lyman Stone, China’s real fertility rate is probably much lower — perhaps as low as 1.1. This matters, because the mathematics of demographics are merciless. 

To see how important these numbers are, think about a sequence of three generations. If the TFR falls below replacement, then each new generation will be smaller than its predecessor. For instance, a constant TFR of 1.7 means that your children’s generation will be only 85% as big as your own, and your grandkid’s generation 72%. That’s a significant decline, but manageable. 

Now try a TFR of 1.4 — this brings down the generation size to 70% of the starting point within just one generation and to less than 50% within two generations. We’re talking about proper depopulation here: schools closing down; businesses struggling to find workers; villages and towns inhabited by no one but the elderly — and, in time, only by ghosts. 

It’s already happening in some places. The village of Nagoro in Japan is famous not because its population decline is unique (sadly, it isn’t), but because its departed residents have been replaced by life-sized dolls. Created by Tsukimi Ayano, the effigies work in fields, wait at bus stops and fill the classroom of a school that closed a decade ago. Whether one finds the display poignant or eerie, it’s a haunting reminder of what’s happening right now in left-behind communities across the developed world — and what might happen to the rest of us in the decades ahead.

At a TFR of close to 1 — the goal of the one-child policy — we enter into the realm of country-wide demographic collapse. Each generation is roughly half the size of its predecessor. Over several generations, a nation basically disappears. If you want to know what that future would be like, don’t read Nineteen Eighty-Four or Brave New World, but P.D. James’s The Children of Men.  

And this is a prospect that is already hitting some countries. According to the latest figures, the TFR in Singapore is 1.14, in Hong Kong it is 1.07 and in South Korea a terrifying 0.86. North Korea doesn’t have to nuke its southern rival — just wait for it to empty out. 

If China’s real TFR is in this ballpark, then the apparent panic of its government is no surprise. Xi, after all, will be well aware of what happened to Japan thirty years ago. In the 1980s, the Land of the Rising Sun was where China is now — the emerging economic superpower and number one threat to America’s pre-eminence. Back then, Japan was at the cutting edge of modernity — a neon-lit vision of the future that the West could only aspire to. 

The buzz — or, more accurately, the hype — was reflected in Japanese share and property prices. By 1989, the Japanese stock market accounted for over 40% of all the stock market values in the world. The country’s real estate was worth more than all the land in the US (despite America being 26 times bigger). 

Then there was the most mind-blowing statistic of them all. The Imperial Palace in Tokyo sits on a plot less than one square mile in area. Yet, at the peak of the property bubble, the grounds were valued at more than the entire US state of California. 

Of course, it couldn’t last — and it didn’t. In the early 1990s, land and share values collapsed, plunging Japan into its “Lost Decade” (more like two or three decades) of economic stagnation. 

It’s significant that the peak of the bubble — 1989 — coincided with the “1.57 shock“. This wasn’t an earthquake, at least not literally, but the news that Japan’s total fertility rate had declined to a record low of 1.57. By today’s standards, that’s really not that low; but at the time it caused national dismay. Might it also have contributed to the bursting of Japan’s economic bubble?

The decision to have children is an expression of faith in the future. Without that faith — and certainly without a rising generation of producers and consumers — it’s hard for a country to sustain a rapid rate of economic growth. It’s even harder to sustain a bubble economy, especially one based on a property boom. What is the point of building all those new homes if there aren’t enough people to live in them? Sooner or later, investors look beyond the hype and ask the obvious question.

It’s the question that Xi Jinping will be fretting about right now. The immediate worry is Evergrande, China’s second biggest property developer, which is teetering on the edge of collapse. But it’s not just one company in peril, but the entire economy. Over the last decade, Chinese property prices have doubled. The country is building five times as many new homes each year as in Europe and America combined. And despite China’s prowess in manufacturing, the real estate sector now accounts for more than a quarter of the country’s GDP. The whole thing is built on a mountain of debt — including the $300 billion borrowed by Evergrande. 

Xi will be pulling on every lever to stabilise the situation, but what he really needs is for his people to go forth and multiply — and fill all those empty homes. 

Can he persuade them to do so? Other countries, including Japan, have tried to reverse declining birth rates — offering parents tax breaks, benefits and other forms of support. But, at best, these pro-natal inducements have had limited success.   

Of course, Japan is a democracy. China is not. Where he sees fit, Xi Jinping has no trouble interfering in the private lives of his citizens. His party once compelled Chinese families to have fewer children, so might it now compel them to have more? In place of forced sterilisation, could we see the state pursue a policy of forced fertilisation? 

If its survival depended upon it, this is a regime that would bring back its two-child policy — only this time as a minimum.