Tuesday, November 19, 2013

Release the Kraken!

China can see some problems looming and have taken steps they hope will correct them. We shall see.

China wants more children and more economic growth:

China unwrapped its boldest set of economic and social reforms in nearly three decades on Friday, relaxing its one-child policy and further freeing up markets in order to put the world's second-largest economy on a more stable footing.

The Chinese leadership has identified the problems of per capita GDP and working people. Looking ahead to 2100 doesn't look good for China if present trends continue.

But simply releasing the potential of entrepreneurs while expecting those people to accept continued Chinese Communist Party political rule is likely too much to hope for.

And given the length of time there has been a one-child policy and the natural forces of education and urbanization that reduce birth rates without the force of law behind it, I doubt that lifting the ban on more than one child will have much effect at all.

Besides, "relaxing" the ban is an understatement:

Some 15 million to 20 million Chinese parents will be allowed to have a second child after the government announced Friday that couples where one partner has no siblings can have two children. But the easing of the policy is so incremental that demographers and policymakers are not anticipating an influx of newborn babies at a time when young Chinese couples are already opting for smaller families, driving the country's fertility rate down to 1.5-1.6 births per woman.

And while the Chinese leaders apparently believe that they can turn on baby production and so want to ease into it with a first step relaxation of the policy, it just isn't a command-and-control issue:

Wang Pei'an, a deputy director of the National Health and Family Planning Commission, said China is opting for the incremental step because a universal two-child policy would result in a major fluctuation in population, putting pressure on basic public services. Some demographers, however, have argued that even a reversal of the one-child policy would not result in a spike in births because of fundamental changes in the public's reproductive behaviors.

So kudos to the Chinese Communist Party for seeing two major problems confronting China. But if every policy change must defend the power of the party in society and government, how likely is it that their solutions will work?

Remember, the people who can afford to have another child might disproportionately be the entrepreneurs who dislike party control and who are also being given the opportunity to make more money without being given more political freedoms. Just what are China's rulers releasing, anyway?