Relaxation Two Child Policy by China
04/06/2021

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Context:

  • Recently, China relaxed its two-child policy and announced it will now allow three children per married couple.
  • It would increase the retirement age by a few months every year. For the past four decades, the retirement age in China has been 60 for men and 55 for women.

Decreasing Population:

  • A problem unique to China, though, is that unlike the other developed countries part of this trend, it is still a middle-income society, despite being the world’s second-largest economy.
  • Prosperous countries like Japan and Germany, which face similar demographic challenges, can depend on investments in factories, technology, and foreign assets.
  • China, however, still depends on labour-intensive manufacturing and farming.
  • drop in demographic dividend could thus hurt China and other developing nations like India more than those in the rich world.
  • When the young population in a country declines, it creates labour shortages, which have a major detrimental impact on the economy.
  • More older people also means that demands for healthcare and pensions can soar, burdening the country’s social spending system further when fewer people are working and contributing to it.
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