China’s ‘one child’ policy may stifle economic growth

Rob Schmitz Apr 29, 2011
HTML EMBED:
COPY

China’s ‘one child’ policy may stifle economic growth

Rob Schmitz Apr 29, 2011
HTML EMBED:
COPY

STACEY VANEK SMITH: New Census numbers out for China today. One-point-three billion people live in that country. That’s actually lower than expected. What does it mean for the economy?

Marketplace’s Rob Schmitz reports.


ROB SCHMITZ: It’s a simple economic equation: a country’s productivity times the growth of its working-age population equals a country’s GDP. China economist Michael Pettis says for decades, this equation has worked beautifully for China.

MICHAEL PETTIS: So from 1975 until roughly now, the working population was growing quite quickly.

In other words, the growth of China’s workers remained a positive number, but now —

PETTIS: This positive number now goes negative.

Uh-oh. China is now the fastest aging country on the planet. Fewer working-age people will have to work harder to support themselves and a growing elderly population. Inevitably, says Pettis, this leads to slower economic growth. Some economists think it’ll also lead investors elsewhere — like to India. India’s steady birthrate means it will most likely become the world’s most populous country within ten years, and will dethrone China as home to the world’s fastest economy within the next couple of years.

In Shanghai, I’m Rob Schmitz, for Marketplace.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.