Can $300 billion stop the shrinking of China’s population by targeting on Gen X and older millennials?

Society & Culture

A famous Chinese economist says the answer to China’s demographic crisis is “printing money to encourage births.” He also says the government should give up on Gen Z and instead encourage people born between 1975 and 1985 who “still believe that more children will bring more happiness.”

Illustration for SupChina by Derek Zheng

Faced with a population that’s shrinking and graying at an alarming rate, Chinese policymakers have been for years trying to undo the damage caused by the country’s decades-long one-child policy and engineer a baby boom. They’ve loosened restrictions on family sizes, currently allowing all married couples to have three children. They’ve dangled tax incentives and housing subsidies for new parents. They’ve made divorce harder than ever. They’ve told young people that it’s their patriotic duty to have children, and called on Communist Party members to lead by example.

But none of these efforts has borne fruit. China’s birth rates have been in steady decline since 2017, with more and more young people refraining from having children or getting married altogether.

Now a new solution has been proposed: On Monday, ​​Rén Zépíng 任泽平, one of the most influential economists in China, released a research paper (in Chinese) titled “The solution to China’s low birth rates has been found.” After examining China’s family planning policies in the past few decades and analyzing measures taken by countries around the world to increase fertility, Ren suggested that the most effective strategy for China to boost birth rates would be to set up a special fund designed to encourage new births.

“If the Central Bank prints up and puts 2,000 billion yuan ($313 billion) in the fund, China will have 50 million more babies in 10 years,” Ren wrote. “This will solve China’s shortage of babies and offset its aging population, making the future more sustainable without burdening ordinary people, enterprises, and local governments.”

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Making a case for his proposal, Ren, who held a senior position at the troubled Chinese real estate developer Evergrande before joining Soochow Securities as its chief economist last year, said that the fund should be fully financed by the central government and could be used for a wide variety of incentives and projects, including cash rewards for families, tax breaks for new parents, and more government-backed childcare facilities. 

“Designers of the new fund can draw inspiration from China’s investment in shantytown redevelopment projects and the Central Bank’s program to help companies cut carbon emissions,” he wrote. “China used to inflate real estate prices just by printing money. If we employ the same strategy here and start printing money to encourage births, we will have more young people in the future.” 

Ren also urged policymakers to adopt his suggestion as soon as possible because those of childbearing age and willing to have babies will become infertile soon. “The fund is mainly for those who were born between 1975 and 1985. The government should stop counting on those who were born after 1990,” he continued. “The reason is simple. People born between 1975 and 1985 still believe that more children will bring more happiness. But for millennials and Gen Z, many of them don’t even want to get hitched.”

Elsewhere in the article, Ren proposed a string of policies that might help mitigate the problem of falling birth rates, such as lifting birth restrictions altogether and making public services more accessible to unmarried mothers. But these measures, Ren said, were too “modest” to fix the baby crisis as China needed something “radical” and “innovative.” 

Online, Ren’s idea of a special fund has generated a mix of excitement and skepticism. While some people praised Ren for “thinking outside the box,” others criticized his proposal for “simplifying the issue” and “not considering the likelihood of all sorts of chain reactions.” “A stimulus like this will certainly cause inflation, which will make living costs even higher for ordinary people. How could an economist not know this,” a Weibo user commented (in Chinese). Another person wrote (in Chinese), “Those who were forced to undergo sterilization under the one-child policy are still alive. Can we create a fund to compensate for their losses and agony first?”

It seems unlikely that Ren’s proposal will get support from the government. On Wednesday, Ren was banned from posting on Weibo, where he had more than 3.5 million followers. Visitors to his account are now greeted with the message: “This user has been suspended for violating relevant rules and regulations.” But no explanation is given as to what his specific violations were.

This story was updated on January 13, 2022, with new information on the blocking of Ren’s social media accounts.