The government of China’s largest city, Beijing, is considering new measures to curb population growth. Liu Zhi, director of the municipal commission for population and family planning, told China Daily on Saturday that the city plans to start extensive research into the characteristics of the urban population. Over 500,000 people have moved to the city recently. Beijing is home to roughly 19 million Chinese.
The government is currently faced with an aging population and low birth rates due to the government’s one-child per family rule. That rule is being relaxed on wealthier families, but remains in tact for the working class who are migrating to Beijing and Shanghai in search of employment. The government needs these workers in the city because an aging population is becoming more reliant on a working age tax base to sustain them.
Moreover, even high real estate prices in the major cities have not been enough to scare newcomers away. Real estate prices have been rising around 1% month over month. Forty-nine cities are currently devising plans to cap real estate prices, but missed a central government’s deadline to do so.
Shanghai’s city government said early this week that it would cap prices on new residential properties equal to the GDP of the city and the average percapita rise of both urban and rural households around the city.
Rising wages, rising inflation, high cost of housing in Eastern China cities and an aging population are all growing concerns for the government, and China investors. China’s aging population and its social security and healthcare needs will start to look like the situation in the US, if not worse, sometime between 2015 and 2020. Still, China is a top-down command economy with nearly unlimited spending powers.
“We think the government will be able to engineer a soft landing,” said Martin Schulz, Managing Director of International Equity at PNC Capital Advisors about China’s new five year plan to increase spending on the social safety need and move development resources to the interior, mid sized cities in the country.
