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Declining birth rates have been a common concern for most developed countries whereas population boom seems to be the main issue facing developing countries. But recent statistics and news reports in China suggest a reserve case. According to figures issued by China’s National Health and Family Planning Commission (NHFPC), the country’s fertility rate is between 1.7 and 1.8; such figure is estimated to be below 1.5 by the Beijing-based Brookings-Tsinghua Centre for Public Policy.  The fact that China’s fertility rate is lower than 2.1 per couple, which is the population replacement rate according to demographers, signalled as a warning bell to its policy makers. Following a number of “pilot programs” in small cities, China relaxed its decades-long family-planning policy in 2013 by allowing couples to have two children if either parent is an only child. Before the policy was enacted, some scholars worried that it would stir up a baby boom, which would consequentially worsen resources allocation and related problems.

Such worry soon turned out to be redundant. The policy relaxation was estimated to affect 10 million to 20 million families, half of which might choose to make use of the policy change. However, by the end of May, 2014, only 271,600 couples had applied for permission to give birth to a second child, with 241,300 couples having been given the permit. Among families who do try out the new policy, unintended consequences arise. On April 2, 2015, a 12-year-old girl committed suicide after she found out her parents planned to have a second child. Why did the ease on China’s one-child policy fail to trigger a baby boom as one would have expected after decades of forced birth control?

The answer partly lies in policy-makers’ failure to realize many Chinese families are using their Reflective system to decide, if not calculate, whether they should have kids or not. Richard Thaler, economist at the University of Chicago, and Cass Sunstein, professor at Harvard Law School, pointed out that human thinks within two system:  Automatic system, which usually leads to an uncontrolled, unconscious, and fast decision-making process, and Reflective system, which means taking time tot think before making a decision. There are many factors that contribute to Chinese families’ reliance on their Reflective system in making child-birth decisions.

One of them comes from the contrast between the legacy of its one-child policy and the complexity of the current second-child permission application process which also varies from province to province. Liberal paternalists Thaler and Sunstein described in their book the six principles of a successful nudge, or a good choice architect, that is, “iNcentive, Understand mappings, Defaults, Give feedback, Expect error, and Structure complex choices”. In China’s new family-planning policy’s case, none of these principles are met.

China’s family-planning policy was first introduced in the late 1970s to rein in the surging population by limiting most urban couples to one child and most rural couples to two children, if the first child born was a girl. Through 2011, according to the government, it had prevented some 400 million childbirths. While it did harvest the population control effect, such outcome came with a price. Since it came into effect, the policy has resulted in 336 million legally mandated abortions, 196 million sterilizations and the non-consensual insertion of 403 million intrauterine devices, many of which were brutally enforced on pregnant women. Even after China announced the relaxation on its one-child policy, the overall birth-control system remains in place and local governments are still reportedly trying to keep to population quotas.

These cases and have a psychological impact on people when they are deciding or assessing whether they are truly allowed to have a second child or not. In other words, although the new policy has been introduced, the default “child quota” for each family—be it people’s perception or the real case— remains as one; many Chinese couples are thus heavily relying on Reflective system to calculate whether it is worthwhile, if not safe, to have a second child.

“A nudge clearly becomes a shove when it is mandatory, but the harder it is to opt out, the more a nudge turns into a shove.” said Thaler and Sunstein in an 2008 interview. This also explains why China’s “second-child” policy stimulus failed.

While China’s central policy-makers announced its decision to loosen its decades-long population policy at the third plenary session of the 18th Central Committee of the Communist Party of China on November 15, 2013, no detail timeline of when and how each province will put the new policy into place was not made clear. Among provinces where the new policy is enacted, the implementation mechanism varies from place to place and none of them is not tedious: in most cases, couples will have to apply for permission before pregnancy; during the application process, couples will have to provide their marriage certificate, house registration documents, and other proofs signed by village/neighbourhood committees. Such time- and energy-consuming paperwork requirement contributes to policy-makers’ failure to produce a successful nudge or trigger a baby boom.

Another obstacle—a more institutional one—is the Health and Family Planning governmental system itself. Chinese law requires local officials to submit those fines – which China calls a “social maintenance fee” – to the national treasury, although they are then returned to local budgets. This serves as an incentive for local officials to use second children as a revenue source; in the past four decades, such fee has accumulated to 2 trillion yuan ($324 billion USD). According The Globe and Mail, in 2012 alone, such fees in two-thirds of China’s provinces found that they had brought in $2.6-billion in fines from violators of the policy. These commissions, along with their affiliated demographics institutes and researchers who also benefit from keeping the status quo, have formed a strong coalition within the government as political scientist Thomas Penpinsky has suggested and will very likely act as veto player—a concept that has been insightfully studied by another political scientist Andrew MacIntyre—in blocking the new policy from launching.

China now faces a vastly different scenario from that in the late 1970s: a quickly aging society with too few young people to support their parents and grandparents. The country’s labour pool declined in 2012 for the first time in almost 50 years. The ratio of taxpayers to pensioners is expected to drop from almost five to one to just over two to one by 2030. Apart from economic concerns, the old population policy is also causing some painful social problems — it left bereft mothers and fathers who lost their only child to illness or an accident and this disadvantaged group numbers about a million and grows by 76,000 each year.

In an online poll by China’s state media, 63.97% of the participants indicated that they would not have a second child even if China fully eased the one-child policy. Next time when Chinese policy makers want to nudge their target audience, perhaps they might want to rethink how its prior policies affect the public’s modes of decision-making first and provide then with more readily and easier policy choices.

To understand better why low fertility rate is a warning bell for Chinese policy-makers,  check out the infographics I made here.