China has banned the Twitter-like Weibo account of Ren Zeping, an Internet celebrity, and a former economist in mainland China. Ren was also the chief economist for Evergrande China Group, one of China’s largest real estate developers, which is now mired in debt.
At the top of Ren’s Weibo account, the notice said he had “violated relevant laws and regulations.”
What had Ren posted on his Weibo account?
On January 10, 2022, Ren posted an article titled, “The Solution to Findings of Low Fertility — The China Fertility Report.” His article stated that the main reasons for low fertility are the high cost of raising children and high housing prices. Therefore to solve the low fertility rate, China must reduce the cost of raising children. Ren believes that establishing a fertility incentive fund may stabilize growth and boost domestic demand in the short term. It can improve the supply side, optimize the population structure, and help national rejuvenation in the long run.
In his post, Ren suggested that the central bank print 2 trillion yuan (US$314 billion) to support the birth of 50 million babies over the next ten years.
Why 2 trillion yuan? Ren explained that family social welfare expenditures related to childbirth incentives account for two to three percent of GDP in OECD countries OECD stands for the Organisation for Economic Co-operation and Development. It is is an international organisation that works to build better policies for better lives. China’s GDP is 110 trillion yuan, so Ren believes the incentive fund should be 2 trillion yuan.
Ren’s figure of 50 million childbirths for ten years is an estimate based on the assumption that 15 million babies are required annually to stabilize the population. There are about 10 million per year using the 2021 low fertility rate of 1.1 percent. So 5 million per year for ten years is 50 million in total.
Ren also urged the authorities to establish the fund as quickly as possible. “We must seize the time when we can still have children from those women born from 1975 to 1985 because they still believe that having more children is a blessing. He reminded that the post-90s and post-2000s generation would not want to discuss having a second or third child. Many people are not even willing to get married.
Why was he banned on Weibo? Some speculated that Ren might have hit a nerve with the authorities. The economic strategy proposed by Ren reflects an unspoken consensus among Chinese economists; that is, the regime’s economic model may have come to an end. The regime has tried to control the high housing prices. In the past, China’s inflation and debt risks were mainly absorbed by real estate. Printing money for more childbirths now would likely increase prices and be suicidal. It could push the Chinese economy further into a recession.
Source: sina.com, January 10, 2022