China's Baby Loan child policy: Jilin province is now offering $31,000 loan to compete with declining birth rate

 

China offers $31,000 loan to young couples to boost birth rate 

China, who once compiled the one child policy in 1980 to control its population,  has recently announced to give a special loan called 'Baby Loan' of 31 thousand dollars (23 lakh rupees) encouraging couples to marry and have babies, as the rapidly-aging country trying to reverse a slump in births.

Now, whole China is facing the problem of a falling birth rate. The current population of China is also aging rapidly. China's three northeastern provinces - Jilin, Liaoning and Heilongjiang - are facing the fastest-shrinking-population issues. In such a situation, China has taken this step to overcome the situation.

The population of the region decreased by 10.3% in 2020 compared to 2010. During this period, the biggest fall in the population of Jilin has been recorded at 12.7%. For which once again in August 2021, the policy of three children has been brought to increase the declining population.

The 'Baby Loan' which is also being considered as 'marriage and birth consumer loan' will also be  reduce interest rates as per the number of children a couple has. What’s more: Couples who have two or three children will also get tax discounts if they set up a business.

The Chinese government believes  that the new policy will come with “supportive measures, which will be conducive to improving our country’s population structure, fulfilling the country’s strategy of actively coping with an aging population and maintaining the advantage, endowment of human resources”, (Source: Xinhua news agency)

Jilin province in northeast China will support banks to provide up to 200,000 yuan ($31,400) of “marriage and birth consumer loans” to married couples, according to an official blueprint on policies to promote population growth. There were no details on how the government would offer support, but the proposal includes discounted interest rates for the loans that vary according to the number of children a couple has.(Source: Bloomberg News)

The One Child Policy was enforced by China under its former leader Deng Xiaoping, in 1980 to counter the burgeoning population and expedite economic progress which remained in force till 2016. According to the data of China's census in 2021, the birth rate here has registered a decline for the fourth year in a row. In 2020, 12 million children were born here, which is 18% less than the 14 million children in 2019. It is undoubtedly pointed to the  decreasing Total Fertility Rate of China's declining population.

The number of people above 60 years of age is 18.7 % i.e. 24.4 crores, which is 5.5% as compared to the previous population, 44% higher. According to the UN report, the population of China is projected to decline drastically by the year 2030.

By seeing all these issues now China has formally revised its laws to allow couples to have up to three children, to boost the birth rate.

How will China's birth rate support its economy? 

According to an analysis by Robin Brant for the BBC in May, the demographic change China is experiencing is not unique, but it is a significant issue because it has the biggest population in the world and has an economy that it is trying to make more reliant on domestic consumption.

“China's Communist leaders have already said the retirement age will need to go up to deal with those demands and costs. This could mean more work to come for the country's workers,” Brant noted.

Though a three-child policy has now been announced by the Chinese government, many remain sceptical, wondering how it would be able to address challenges that the 2016 change could not, due to factors such as higher cost of living and long working hours. 

Why do young Chinese couples don't Want to have kids? 

The reality is that the baby loan policy brought by China has become a cause of controversy not only at the global level but also among Chinese couples, due to the huge expenditure on the birth and upbringing of a child in China. Let's take a look at the reasons-

As per a Reuters report that cited a 2005 study by a state think-tank, it cost 490,000 Yuan (Rs 57.6 lakh approx.) for an ordinary family to raise a kid in China. The figure had quadrupled by 2020, when the local media reported that the cost had risen to as high as 1.99 million Yuan (Rs 2.35 crore approx.) to raise a child in the country.

It starts with astronomically high prenatal tests and deliveries. While the costs are usually covered by state insurance in Chinese public hospitals, the resources-strapped public hospitals cannot cater to all women. The alternative is turning to private clinics, which charge more than 100,000 Yuan (Rs 11.7 lakh approx.), as per reports.

This is only the beginning. The cost of hiring an in-house nursemaid (known as yuesao in China) is about 15,000 Yuan (Rs 1.7 lakh) a month. If you're looking for professional postpartum care centers, which incidentally are preferred by new mothers who are working women, the costs range from 150,000 to 350,000 Yuan (Rs 17 lakh to Rs 41 lakh) per month.

And all this is just till the birth of the child. The real expenses begin only after that. The private schools charge up to 250,000 Yuan (Rs 29.5 lakh) as fees per year and the parents have no option but to cough up because public schools are only for kids who have hukou. Let’s not even get into the costs of private tutoring and extra-curricular activities such as piano, tennis or chess classes, which are a social norm.

It is therefore not unsurprising that young couples choose to not have kids. Caught between home loans, mortgage and car loans, the 'birth loans' are not easing the situation, but only making the Chinese people work to pay their bank dues

That's why young couples here choose not to have children. Caught between home loans, mortgages and car loans, 'birth loans' are not easing the situation, but instead forcing Chinese people to pay their bank dues.

Conclusion

China’s latest census confirmed long-standing demographic imbalances that could pose major threats to the sustainability of the country’s economy, prompting Party leaders to take action. 

According to the census, there were 12 million newborns in 2020, which was the lowest number of births since a famine in the 1960s. The fertility rate was 1.3 children per woman in 2020, which is far below the replacement level of 2.1. It is similar to the fertility rates in Japan and Italy, which are home to some of the world’s oldest populations.

In contrast to developed countries with low fertility rates, however, China is still a developing middle-income economy with a limited social security net. Further, China does not take in significant amounts of immigrants, which puts further importance on domestic fertility to maintain the size of its workforce. By 2050, demographers project that the over 60 years of age population could make up one-third of the country’s total. Now China is dreaming of restoring the declining birth rate through this plan.