China academics suggest 'no-child tax' to boost fertility rate

August 22, 2018 17:04
Though China has eased the one-child policy, many mainland couples are reluctant to have more children in view of rising living and other costs. Photo: China Daily

More young Chinese couples are joining the ranks of DINK families (Dual Income, No Kids). Given this, some Chinese academics have suggested that childless people or parents of just one child should be made pay into a "maternity fund", so as to encourage citizens to have more children.

Mainland China, along with Hong Kong, Japan, South Korea, Taiwan, Macau and Singapore, figures among the seven regions with the world’s lowest birth rates.

Interestingly, all these regions have Confucianism cultural roots, which values having children to carry on the family name. Some argue that children in these places face huge stress in their studies, so young couples are opting not to have kids as they don’t want the children to suffer a similar pain as they themselves went through while growing up.

Nanjing University economics professors Liu Zhibiao and Zhang Ye have, in an article published in Xinhua Daily last week, suggested that those below the age of 40 and with fewer than two children should contribute annually to a second child fund.

They can take out the money when their second child is born, as a financial support to help raise the kid. Otherwise, they can only withdraw their money at retirement, the academics suggested, in an idea aimed at encouraging childbirth.

China introduced the one-child policy in late 1970s, which led to a large number of single children. Now such offspring have to support six elderly people in the family, including their parents and grandparents. That could impose great burden on the government welfare system.

Given this, the so-called second-child fund could encourage young parents to have more children. And if they don't, the locked-in contribution to the second-child fund will prove useful, as it can help relieve the fiscal burden on the government.

Meanwhile, Hu Jiye, a finance professor at China University of Political Science and Law, suggested that the Chinese government should consider imposing a 'no-child tax' on DINK families for future social support funds.

Hu argued that these DINK couples won't have any offspring to take care of them when they turn old, and they will rely on social resources. Therefore, the no-child tax would intimidate or punish these couples.

However, these suggestions have stoked public outrage. Many believe it's a personal choice whether one wants to have a child or not. Also, these recommendations will mark a U-turn against the nation's long-time one child policy.

Low fertility rate is common headache for many developed economies worldwide.

Some countries have introduced "birth bonus" to encourage young couples to have more children, and it seems rewards work better than punishments.

For example, the Australian government offers the equivalent of HK$12,000 in cash subsidy for first child of a family. Russia even hands out cash coupons worth up to HK$70,000 for families with two or more children. Singapore offered a generous HK$80,000 worth subsidy for first and second children, and a further HK$130,000 bonus for third and additional childbirths.

In Hong Kong, the government is considering a proposal to extend the maternity leave and offer more childcare services. The effort is in the right direction, but the city should first tackle the housing shortage issue if it wants to boost the birth rate.

This article appeared in the Hong Kong Economic Journal on Aug 20

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist