How Can Policymakers Address Declining Birth Rates and Local Debt in China?

CGTN Europe

CGTN Europe spoke to Xiaolin Chen, Head of International at KraneShares.

Transcript

00:00Charlene Chen is head of international at Crane Shares.

00:04I think China's total fertility rate is around 1.1 to 1.2 children per woman.

00:12This is way or well below the replacement level of 2.1 and probably among the lowest level in the world.

00:19But even with a small rebound, literally last year to about 9.5 million children,

00:25that still fell by about 1.39 million.

00:29So this means China probably will age faster,

00:32but it also means the policymaker will push the shifts towards high productivities in the sectors such as service sector.

00:42They probably look more rapidly to upgrading and also focus on the silver economic opportunities in health care,

00:50elder care, or age-friendly technologies.

00:54I think now the policy's priorities will likely to include raising the effective retirement age.

01:03Believe it or not, I shall, if I work in China, to retire in a few years' time.

01:08And I think they would also work on expanding vocational retraining and improving child care, housing support to families

01:20to make them feel more confident of having more children.

01:24The interesting thing about this conversation, whether you're talking about China or Europe,

01:29is the birth rate obviously is of enormous concern.

01:32Governments can pull the levers of policy, can't they?

01:36It doesn't necessarily mean that women will go out and have more babies.

01:39That's totally true.

01:42It really depends on a lot of the factors.

01:45Income, also, it has the one-child policy.

01:49Since 1980s, for decades, it's very hard to change that sentimental feelings towards the policy overnight.

02:00That's also why government is incentivizing for families that have more children,

02:05as one second provides more fair and encourage working environment towards women,

02:12and also giving more child care in the system to reduce tuition fees or helping you on the monthly expenses, etc., etc.

02:23Eventually, they do hope that can turn into more results they can see, hopefully.

02:30But I agree with you.

02:31It will take time for this to work out, and the government is doing everything they can at the moment

02:37to introduce friendly policies to build up the confidence.

02:42Let's talk about debt.

02:43Let's talk about debt, because economies around the world are concerned about debt.

02:47China is concerned about debt.

02:48What's it doing about debt, and in particular, local government debt?

02:54Local government debt has been a long effort.

03:00If you remember this, probably about almost 10 years ago,

03:03they have to reduce this debt on the local government or even on some of the shadow banking systems.

03:10They do spend efforts and efforts on that to deleveraging,

03:14and that story or that lesson is learned in a hard way.

03:18So that's why you felt this time around the policy easing are all centered around targeted or managed or orderly cuts,

03:26interest rates or cuts, the lending rates through banking systems,

03:30rather than corporates go and borrow, find any channels that you can.

03:33So one is more of like a managed, orderly way of easing in that way.

03:39That's one.

03:40And also allowing local government to issue certain special purpose bonds,

03:45but used to advance your cities.

03:49It could be infrastructure, excuse me,

03:51it could be the manufacturing upgrading or advancing your manufacturing chain purpose for that.

03:59I mean, the local governments need to find a better way to rely on as a source of income than, you know, rely on land sales.

04:09But I think over time, higher labor income shares and stronger small business support,

04:15which is all the policy introduced of cutting rates,

04:18give corporates favorite policies are aimed for.

04:22You will have more of, you know, inclusive public services can expand and the tax base as a result.

04:29So making local finance are more sustainable without relying on land sales.

04:35So making local businesses would be more sustainable without relying on land sales.

Category

Transcript

Be the first to comment

Recommended