My Take | How to fix China’s demographic crisis? Take a page out of the Song dynasty’s tax policy

A Chinese historian recently published a bestselling book on China’s Song dynasty, one of the most admired periods in Chinese history for its cultural and commercial exuberance. The Song dynasty, which ruled China from 960 to 1279, also witnessed a key “breakthrough” in China’s population history.

It was during Song rule that China’s population exceeded 100 million for the first time, breaking a historical ceiling of about 60 to 80 million even though the territorial coverage of the previous Han and Tang dynasties was much larger. According to the author, Shen Xubin, China’s population expanded during the Song dynasty thanks to an important tax regime change.

According to the author’s findings, China’s rulers before Song had collected taxes largely based upon the number of people, so a household had to shoulder more taxes and duties if there were more people under its roof. As a result, the tax system encouraged persistent and widespread infanticide throughout the Han and Tang dynasties. Starting from the Song dynasty, however, China’s rulers started to collect taxes based upon land ownership and property, a change that encouraged people to have more children as they became less of a burden and more of an asset.

While the book discusses China’s policy changes made a millennium earlier, the debate about the relationship between state and household, and its implications for demographics, is just as relevant today because China has ceded its crown as the world’s most populous country to India and faces a daunting job of encouraging births.

The failure of China’s new pro-child policy over the past couple of years is hard to ignore. Birth numbers keep dropping despite policy relaxation and incentives offered to parents. Many local governments are even afraid to publish recent local birth data. While most parts of the world are seeing a similar drop, China’s demographic picture is particularly bleak as annual new birth numbers have nearly halved from about 17 million in 2014 to 9 million in 2023. It is, by any definition, a crisis.

The Chinese government, which had wrongly believed in population explosion theories and invested state resources to implement a “one-child policy” regime for over three decades, has woken up to the new reality. But it has proved powerless, or even clueless, when it comes to encouraging young people to have more babies. According to recent media reports, China has started to mobilise part of its grass-roots family planning organs to check the pregnancy status of newlyweds and encourage them to have children as soon as possible. Only a decade ago the same agencies were policing against “out-of-plan” babies!

China’s central government on Monday published a policy document designed to develop a “birth friendly society”, urging local governments to offer maternity leave and other benefits. But financial subsidies offered by local Chinese governments to couples who have a second or third child have proved useless in changing the big picture. In a survey conducted in Yongjia county of affluent Zhejiang province, only 5 per cent of newlyweds said they were willing to have three children – the maximum number a couple can “legally” have under China’s revised family planning law.