There was a media brouhaha earlier this year suggesting that Shanghai was the first city in China where the one-child policy was being actively dismantled.
The story was an enormous exaggeration. There has been no change of policy in the city. If a husband and wife are both single children themselves, they are entitled to have two kids. That’s always been the rule.
If anything had changed, it was that the Shanghai government was trying to encourage more people to take advantage of their dispensation.
The reason for this became clear last week, with the latest statistics from the family-planning bureau. Almost 8pc of couples of childbearing age are hesitant over whether to have kids, up from 3.37pc in 2003.
This is no surprise, of course. As people get richer, they defer having children. Husbands and wives become more career-minded, the cost of bringing up a child rises and so on. Look at how old Europe is getting.
More worryingly, the bureau estimates that by 2035, 40pc of people in Shanghai will be over 60. That’s up from 18.1pc in 2000.
If you discount another 20pc or so of the Shanghai population as being too young to work (under-15) then you are left with only 40pc of the city working to support the other 40pc of elderly. You can imagine the welfare costs, and in fact Shanghai’s urban pension fund has reportedly been in deficit since 2002.
Shanghai’s golden economic era in the 1980s came about not just because of favorable central government policies, but also because a huge flood of baby boomers of the 1950s and 60s entered the labor force.
Those workers are now on the brink of retirement, but at the same time, there’s been a voracious appetite for labor as the city has continued to expand.
The solution is not the abolition of the one-child policy, but the increased migration of young people to Shanghai from rural areas, where families are still having multiple children. Hopefully in the future, an increasing number of these migrants will attend universities in Shanghai and provide an increasingly skilled labor force.
Internal migration can dramatically slow Shanghai’s ageing process, especially if the city allows migrants to settle permanently and make greater tax contributions to the local welfare system. On a side note, the phenomenon should also underpin property prices in the city. The cost of housing in Shanghai is already sky-high, but in the long term, those millions of people moving to the city could inflate them even further.