Economic growth, Population, China’s One-Child policy, and Malthusian economics
British economist Thomas Malthus, 1766 - 1834, developed a theory which proposed population would grow geometrically while food production would increase arithmetically. He declared therefore that human population growth would outpace food production quickly and lead to societal ruin. More than 200 years and about 7 billion more people later, he could not have been more wrong. Far from never-ending population growth reducing our world output, output has outpaced it so fast that we have almost eradicated world food poverty[i]. In Malthus’ time, the majority of the world’s population lived absolute food poverty, and today a clear minority do: less than 800 million of almost 8 billion people. There is always more work to be done, but it cannot be overstated that the number of people lifted out of poverty around the world due to the expansion of free market principles and globalisation would have been unthinkable 200 years ago. Long-term predictions are hard to make, so I wouldn’t be too harsh on Malthus for getting it so wrong. After all, he died before any serious economic advancements were made. He could not have imagined the combustion engine would revolutionise world economies and agriculture, or that free people would celebrate giving away vast quantities of food to poorer people at home and abroad, never mind the invention of the internet or the iPhone. The ability to make accurate predictions is essential to the scientific method. Malthus was an intelligent man, and if he were alive today, he would accept the results have proven his predictions wrong. The problem is that contemporary thinkers do not, and still use his failed theories to support their policy ideas of today.
One erroneous belief, which survives because it is sounds more nuanced than Malthus’ most famous prediction but is still bolstered in part by some vaguely Malthusian ideas, is that a reduction in population size is a requirement for significant economic growth. This idea is more regularly made in defence of the one-child policy in China, which lasted 36 years. “China could not have pulled itself out of poverty without the one-child policy” so goes the conjecture. The issue is not one so simple as to say “you need to reduce population size to increase growth” or “more people means more economic growth”. Neither of those is true, nor would Malthus have said so. Statistics must be used properly and taken over an appropriate span of time for them to mean anything. The data, which we will come on to, shows us that great periods of growth can occur whether population growth increases or declines. Even worse than oversimplification, some non-economists go so far as to say that “a reduction in the growth of the population shows an increase in GDP per capita, which proves the reduction in population growth caused the economy to grow”. When concluding this by observing history, this is a classic misidentification of correlation as causation. It is simply a mistake in reading statistics: even if GDP were exactly the same in years 1 and 2, and by definition the economy had not grown at all, GDP per capita would still increase if you shrank the population. That is to say, by altering the size of the population, GDP per capita can increase for a stagnant or shrinking economy. Conversely, a country’s GDP could increase, but if the population grew faster, then GDP per capita would fall despite a growing economy. The correlation of population growth and economic growth should not be confused with causation.
The rates in population and economic growth around the world in different countries can be attributed to many factors. In the 20th century the 2nd world war is one of the most significant factors. For example, an economic and population boom followed immediately after the war years in Germany, known as the Wirtschaftswunder (economic miracle) or the Miracle on the Rhine, due to the economically liberal policies pursued by the Minister of Economics, Ludwig Erhard. Since it is a buck to the longer-view trend and to European policy, which is generally highly regulated, it is no surprise that growth rates reduced after that boom and are lower now than then. Obviously, perpetual population decline cannot coexist with a growing economy because you require people for them to be productive. No people, no economy. A trend of declining population and an expanding economy can exist, temporarily. To examine whether restrictive population control is required for significant growth in the economy, we would need to see reduced populations reliably causing an increase in economic growth across several countries, and expanding populations slowing economic progress, over significant spans of time.
In the following examples, all data is taken from World Bank (data.worldbank.org).
In Germany, the total population fell by 0.02% from 1970 to 1977, while GDP increased by 22.3%. This snapshot alone might be taken as “proof” of a principle that economies grow faster when their populations shrink - but, faster than what? We need another snapshot in time for a comparison to be possible. From 1987 to 1997, population increased by 5.39% while GDP increased by 28.36%. This proves the prior claim to be false, as we can see that population increases can coincide with even greater economic growth than population decreases. This is the problem with relying on a sweeping statement to make a point: you only need one contradiction to prove it wrong. If a defence of the one-child policy in China rests on the premise that greater economic growth relies on lower population growth, then we have already disproven it.
Chile, due to economic reforms in the 1980s, saw one of the most remarkable periods of economic growth from the reforms until today. The country quickly became the richest in the region, despite lacking the abundant natural resources of its neighbours, such as Venezuela and Brazil’s oil reserves. From 1968 to 1988, saw a GDP increase of only 64.79% while total population increased by 35.68% In the 20 years that followed, from 1988 to 2008, Chile’s GDP increased by 202.5% and its population still increased by 30.05%. Here we see a huge growth in the economy and the population over two 20-year periods, with population growth only slowing modestly over those 40 years (a 0.25% reduction in population growth per year over the latter 20 years, which is in line with a general trend for developed countries). While the economy grew by 398.48%, the population grew by 76.46%. The cause of the transformation of Chile into a high-income economy with hugely reduced poverty was the liberalisation of the economy in the 1980s. Neither did Chile’s economic growth significantly affect population growth, nor did population growth create a change in economic growth. Chile was able to achieve huge economic growth with a continuously high rate of population growth, without any restrictive policies for population control.
Perhaps the most striking example of economic growth in world history is Canada, Australia, and the USA – the Western offshoots of Britain - in the 19th and early 20th centuries. To a slightly lesser extent, Britain itself, too. At no other time in world history has such a rapid development in the lot of the average person occurred. In the space of 100 years, from 1820 to 1920, the GDP per capita of Britain had increased from $4,085.78 to $8,959.56 (original data equated to the value of the 2020 USD for ease of appraisal). In Canada, from $1780.88 to $7606.17; Australia, from $1,020.46 to $9,389.02; in the USA, from $2,681.17 to $10,937.44. In percentages, these increases are between 119% and 820%. These percentages over 100 years of development may not sound remarkable after looking at Chile’s advancement over a mere 40 years, but one must appreciate the historical context and the state of the rest of the world. These were the first emerging economies developing to advancement – there were no existing advanced economies for them to interact with. The average person was starting from virtually nothing at the beginning of the 19th century. For all of human history up until this point, for hundreds of thousands of years, humans had lived in poverty, misery, and tyranny: under the heel of a king, a queen, a tsar, an emperor, an empress, a mogul, an archon, or some other ruler. At this pivotal moment in history, when economic and political freedom was being won by the people of a few nations, when individuals were free to participate in mutually voluntary exchanges of capital, goods and services, the average person was able to grab hold of the lowest rung of a ladder which they could climb out of poverty. Progression was rapid but could not reasonably be expected to be as rapid as a modern economic miracle which can harness modern technologies. This period of revolution in technology and human ingenuity occurred when the potential of free persons was unleashed. For some frame of reference, take China over the same period of approximately 100 years, where political and economic emancipation had not been achieved: the GDP per capita of China had decreased from $1182 in 1820, to $1044 in 1870 – a reduction of 11.7%, creeping up a little over the next 60 years to $1119 in 1930. Unfortunately, the extension of economic freedom at this time was limited mostly to the western offshoots of Britain, and to Britain and Europe to a slightly lesser extent, meaning the rest of the world lagged behind in their prosperity and alleviation of poverty.
The phenomenal economic growth shown above happened alongside huge population growth:
Population of the United States (United States Census Bureau)
Over a 100-year span and 10 censuses, the US averaged a 23.4% population growth rate and GDP per capita growth 308%. Considering how exponential the population growth is, which makes the GDP per capita smaller by greater divisions, the GDP per capita growth is remarkable. Given how small the population and the economy were to begin with in this fledgling country, and how long a time-span this growth lasted for, makes the example even more remarkable. To outline what constitutes economic freedom: personal choice, voluntary exchange coordinated by markets, freedom to enter and compete in markets, and the protection of persons and their property from aggression by others. In the most successful market economies, these principles usually present themselves as: low/no tariffs, quotas, tax (income, capital gains, sales, inheritance etc.), barrier of entry to business, nationalised industry, regulation of private enterprise, low government spending, and a robust justice system to arbitrate criminality and civil disputes.
It was this kind of change in policy, tested and true, that also began to alleviate Chinese poverty - only it came much later. The Chinese reforms did not go so far as the ideal described above, but simply de-collectivising agriculture (allowing agriculture to be subject to market forces rather than centrally planned) was a huge step in the right direction. Supreme Leader Deng Xiaoping became known as the architect for economic reforms which would liberalise the Chinese economy. “To become rich is glorious” he is alleged to have said, after his capitalist neighbours Japan and South Korea overtook China in economic growth. Market reforms being the antithesis of the Marxist communist policies which had dominated the century – indeed, Chairman Mao purged Deng Xiaoping twice for his economic views[ii] - the new regime was termed “socialism with Chinese characteristics” or “socialist market economy”. Euphemistic enough to pass the smell-test, so it was implemented, for the sake of salvaging the economy. Market reforms they were, nonetheless, and their implementation throughout the 1970s and 1980s they caused an unprecedented rate of economic growth. GDP per capita increased by 853% between 1978 and 2005 - an average of 31.6% per year. It is important to note here for statistical clarity that population growth in China between 1980 and the present day has always been between 0.39% and 1.55%. This means there is significantly lesser change in divisibility for GDP as the years go on, causing GDP per capita to skyrocket. For a frame of reference and a more direct comparison of purely economic growth over an identical time period: the GDP of the China increased from $178.3 billion to $2.286 trillion between 1979 and 2005 (a 1,182.11% increase), while the USA’s increased from $2.627 trillion to $13.04 trillion in the same period (a 396.38% increase). Again, it important to note historical context to get some frame of reference for these numbers: this is a period of China becoming a developed economy after its decline under feudal and communist rule, whereas the USA was in 1979 already the most developed economy in the world – the USA had less room for improvement than China. If we start our analytical history at the beginning of the USA’s move to becoming a developed economy, we find that (all USD converted to current, 2020): China’s GDP was $392.448 billion in 1820, and the USA’s GDP was $24.491 billion[iii]. To elucidate those numbers: China’s GDP under the Qing dynasty accounted for 38.7% of the entire world’s GDP. So, from 1820 to 1979, China‘s economic growth was negative 54.6% and the USA‘s was positive 10,626.4%. From 1820 to 2005 China’s economic growth was 482.5% and the USA’s was 53,144%. This is not a competition - these comparisons provide clarity. The exercise of putting China’s economic development in an international context serves to dispel the idea that China experienced an economic miracle like no other in world history, and therefore its policy must have been perfect. It is not the only economy to have progressed in a remarkable way, it wasn’t even the most remarkable, and its policies were not perfect, but this does not diminish the fact that it did experience an economic miracle after the liberalising reforms of the 1970s and 1980s.
From 2005, Hu Jintao reversed some of these reforms and reintroduced controls and regulations, and the GDP growth rate has been in overall decline since then. Xi Jinping’s rule effectively marks the end of the reform era, as he has reversed many Deng-era policies. His sympathies are much more in line with China’s communist history, Mao, and Marxist-Leninist doctrine. Now China has utilised the market economy to become a world superpower, it seems the new leadership’s focus is toward totalitarian rule, creating conformity in the population, extending surveillance, removing the freedom and autonomy of Hong Kong, and stomping out descendants of old foes like the Uyghurs by sterilising them or “re-educating” them in concentration camps[iv]. As the economic freedom gained in Europe and the Western Offshoots resulted in political freedom, the greatest outpouring of eleemosynary activity the world had ever seen, and to the abolition of slavery, and as the economic freedom in Chile resulted in its political freedom from the military junta, and as the economic freedom gained in Asia’s tiger economies resulted in great advances for the political freedoms of Chinese people in several countries, including Taiwan becoming one of the freest nations in the world, so could China follow that same path. Perhaps this is what the current Chinese administration fears the most.
It is true that the period of China’s most significant economic growth coincided with the one-child policy, also implemented by Deng Xiaoping, and some seek validation in the policy by tying it to the economic success it ran alongside for some time. Validation is essential for anyone sympathetic to the policy, because its social impact was devastating – resulting in “millions of female infants being aborted, abandoned, or killed”[v]. The most powerful recounting of personal traumas the policy caused I have seen was a documentary made by a woman from rural China, filmmaker Nanfu Wang[vi]. I would recommend this work to anyone interested in the subject. It was a reasonably complex policy, strictly enforced in urban areas, more loosely applied to rural areas, ethnic minorities, and varied state to state, with inconsistent enforcement and punishment for violation. One of the most bizarre details, in my opinion, was the widespread phenomenon of state-owned orphanages hiring human traffickers to bring babies to the orphanage, so that they could be sent overseas and adopted by foreigners, which was followed by these employees being jailed by for decades by the very government that hired them after the scandal broke. For me, no amount of economic success can redeem this tragic policy, but we can assess the economic claim for accuracy’s sake anyway.
Firstly, it is not accurate to tie the two time spans together: the one-child policy ended 10 years after China’s GDP growth began to grind to a halt. The policy existed alongside a strong economy and a stagnating one. Secondly, some of the policy’s ill effects on the economy are only beginning to be felt: the birth rate for 2019, 4 years after the abandonment of the policy, was posted by China to be 10.34 per 1,000 people – the lowest level since 1949. This engineered a gender imbalance where people of childbearing age are disproportionately male - an estimated 30 million Chinese bachelors - and the country has a dangerously ageing population. This is devastating the labour force, and the effects will be ever more acute if the birth-rate does not pick up rapidly. Thirdly, there is no reason to credit the one-child policy with economic success when there is no evidence for it, and while we have a good explanation for the economic success backed by evidence (the detail of the liberalising reforms and their effects). Fourthly, we have seen from the analysis above that economies can and do experience significant economic growth with or without population growth, and that, in fact, the most dramatic and long-standing upward trends of economic growth have been married with similarly dramatic increases in population growth. The fact that China already had a huge population does not mean that forcibly restricting the birth-rate caused or allowed economic growth. It is not as though China is spilling over – vast swathes of the country, areas larger than any European country, are sparsely populated or unpopulated[vii]. These areas are not uninhabitable either, no more inhabitable than the Arizona desert, the Rocky Mountains, the Japanese alps, or the Andes, all of which host city dwellers. Economic growth would allow northern and western China to be settled in and developed, even if the population grew. Fifthly, recent change in Chinese policy is testament to the failure of the one-child policy: seen as the China is facing an unsustainable demography, and no baby boom immediately followed the decades of strict birth control, the government doubled the per-couple baby quota from 1 to 2 in 2016.
Map produced by Peter Wood, Ashtree Analytics
None of this is to say that there are not other reasons a country might want to slow population growth. A government which refuses to pursue policies that stimulate economic growth and simultaneously has a concern for human well-being might want to stop more people being born into poverty. A strange concept, but possible in a world of hard-line ideologies. Overcrowding in cities, overburdening of public services, and other considerations might persuade a government to implement a policy of population control at a localised or national level. Control itself may be temptation enough – to successfully eliminate reproductive rights is a totalitarian accomplishment, and the psychological effect that has on a population may be desirable to a ruling class. That tactic would tie in well with wider restrictions on freedom and a refusal to grow the economy, as economic destitution represses a population’s power. So, assuming this is the desired end, for whatever reason, did the one-child policy put a halt to an ever-climbing birth-rate? This chart outlines a stark historical reality of birth rates in China:
The birth-rate declined severely for an entire decade the one-child policy came into effect, meaning, if the aim was to reduce the birth-rate, the policy may not have been required at all. The introduction of the policy seems to have forced an existing trend into one too severe for long-term sustainability. After such a sharp decline in the birth-rate in the late 1960s and throughout the 1970s, partly natural and partly encouraged by a government guideline introduced in 1973 to have a maximum of two children, one might expect a natural uptick afterwards. The one-child policy ensured that did not happen. The slight flattening of the curve and the bump during the 1980s may represent people who had a child because of the introduction of the policy: it meant that all the investment one would plan to put into their children must now be put into one child, and perhaps that prompted people to do it sooner. Perhaps the psychological effect of limiting people’s freedom to do something is that it makes them do it quickly, to whatever extent they can while they can. It is uncontroversial to say that as countries develop, and enough time is allowed, their birth-rates decline. Economic development permits people to earn money in ways that do not require so much pro-creation. A person can sell their ideas, goods or services to sustain a living, rather than raise more children for the required labour to tend to a family farm, for example.
It seems China was already on this path, as was India which did not have a one-child policy. India does have a family-planning policy, but it has not been so aggressive or restrictive as China's. It has largely consisted of a set of guidelines, and a significant part of it realised itself in a debate on the availability of birth control to women. Ghandi opposed birth control, but Periyar E. V. Ramasamy, founder of Dravidar Kazhagam (Dravidian Federation) advocated for it on the grounds of "the liberation of women"[viii]. That battle has been largely won by the pro-birth-control movements. Any appetite for coercive, restrictive policies in India was tempered after the forced-sterilisation of men was tried and failed. India became a signatory to the International Conference on Population and Development Declaration in 1994, which consisted of a commitment to international community that the rights of individuals freely decide the number of children they want and when is protected. Despite this international declaration, and previous failure of policy, forced sterilisation does persist in India as a state-backed project with regrettable consequences. However, that failure of government is a different, complicated subject, and the point here is only to show that India's birth-rate did decline without strict controls. A small number of anomalous states do have a two-child policy, but the punishments for having more than two children is not like under the Chinese one-child policy. For example, in Assam, parents who have more than 2 children may not be employed by the government. That is quite a setback in India, due to its socialism and large public sector, but it is not quite the nightmare that parents and children experienced in China. India is not alone: examples like that of Thailand, which experienced a significant drop in the birth-rate over the same time-period, did not have any birth-rate controls in place.
Neither was China alone in its attempts to manipulate demographics, creating new problems: Vietnam pursued a two-child policy around the same time as it implemented market-reforms in the economy. As with China, Vietnam's restrictive policy compounded an already declining birth-rate caused by the market reforms, which is now having to be reversed by strong government incentives to pro-create including: income tax breaks for mothers of two or more, education subsidies, housing subsidies, and preferential treatment in access to public schooling for the children of two or more[ix]. The story is similar in Singapore, which had a very successful campaign to have people "Stop at Two". Now, Singapore is having a hard time reversing the trend[x]. Neither country was authoritarian in its attempt to manage its population growth as China was, however. Had none of these countries attempted to manipulate birth-rates, it is probable that all of their birth-rates would have declined naturally, as they were prior to policy implementation, and as they did in other countries (especially those with market economies), and none of them would be facing the scale of problems of demography that they currently are. While China, Vietnam and Singapore all got a taste for neoliberal policies during or after the colonial era, India sadly discarded them in favour of socialism, and that has resulted in their impeded economic progress.
Some charge people making any form of criticism toward China as harbouring anti-Chinese sentiment. I will say first that my writing is not a criticism of China, it is a criticism of policy. I criticise the policies I deem worthy of criticism wherever they are implemented. Some go so far as to discredit the economists, statistics, factual data and academic reports on the basis that they are “western”. It should go without saying that academic research, well-sourced and factual, performed by thinkers of all nationalities and affiliations, stands on its merit and not by its origin. The fact that much scholarly work is performed in western countries is not a refutation of its validity, and to be “western” is not equivalent to being anti-Chinese. The biggest tell of this charge being used as a tactic to shut down criticism is that when people employ the western-bias argument to discredit something or someone, they do so selectively. For example, while the works of an economist like the Scotsman Adam Smith are rejected based on his western origin, the works of the Englishman Thomas Malthus are not. Why? Anglo pride? Surely not! It is because this is a game of choosing rhetoric which suits a cause, not a real complaint about western scholarship. It is ironic that western capitalists are treated with the highest suspicion and disdain, when it is the principles they espouse which lifted China out of poverty. Finally, I will profess that I have no anti-Chinese sentiment whatsoever, and not only because I am lucky enough to have over 2,000 Chinese overseas students to talk to just down the road at my local university, some of whom I have befriended. China has a remarkable history, and the latter part of the 20th century proved that the people of China have extraordinary potential when they are free to exchange their ingenuity with others in a market system. This is no surprise to those who study world history and economics, because the Chinese people perform exceptionally well in every place they are afforded economic freedom. Taiwan, Hong Kong, Singapore are all great testaments to this, as are Chinese immigrants in Europe, the USA, Canada, where we find them - as a minority group - reliably outperforming the native population and other groups.
[i] http://www.fao.org/news/story/en/item/288229/icode/ [ii] http://factsanddetails.com/china/cat2/sub7/item81.html [iii] Angus Maddison, Monitoring the World Economy, 1820-1992 [iv] https://www.youtube.com/watch?v=Y4TReo_G74A [v] https://www.du.edu/korbel/hrhw/researchdigest/china/InfanticideChina.pdf
[viii] Veeramani, [January 1981](2005) Collected Works of Periyar E.V.R., Third Edition, Chennai. The Periyar Self-Respect Propaganda Institution, p. 570.