The Chinese economic experience, 1978 to today.

• Author: Qian, Nancy
• Position: Column

One of the most striking phenomena in the past three decades is China's economic liberalization and rapid growth. This has directly affected the lives of its 1.3 billion people, not to mention the millions living within the boundaries of its trading partners. Thus, the Chinese growth experience is of first-order importance for understanding today's economy and can provide useful insights for development in other contexts. My research uses a variety of empirical strategies to study the underlying mechanisms of the Chinese growth phenomenon.

The first theme of my research is demographic change, which is one of the most salient features of the Chinese economy. Several striking facts include the following: 1) total fertility declined rapidly from approximately 2.7 births in the 1970s to 1.9 births per woman by the 1980s, 2) sex ratios at birth increased from approximately 105 males per every 100 females in 1970 to 120 in 2000, and 3) the cohort of prime age adults during the reform era was born or grew up during a famine that killed over 30 million people. I show that these demographic features are outcomes of both government policy and economic change, and have significant consequences for the Chinese economy today.

I first conduct several studies to show that rising sex ratios are related to economic policy and development. When the government increased the relative procurement price of cash crops in 1979 in an effort to diversify agricultural production, and allowed households to make decisions on production in the "Household Responsibility Reform," it raised the relative price of female labor in regions that produce tea. Women have comparative advantage in producing this crop. I compare the sex ratios of cohorts born before and after the reform, between regions that have geo-climatic conditions for tea production and regions that do not, and find that the increase in the relative price of tea led to an increase in the survival rates of female children. This is consistent with parents valuing productive children or with an increase in the bargaining power of mothers if they have less preference for sons than fathers have. The results also imply that rising sex ratios are in part attributable to changes in the gender wage gap, which has been rising steadily since China moved away from a command economy that did not differentiate wages of men and women to a market economy where wages are more closely tied to the marginal product of labor. (1)

I also study variation in the enforcement of family planning policies in rural China and estimate that the policy-driven reduction in fertility increased the fraction of girls in the population by as much as 10 percentage points in some regions. (2) Another important contribution to rising sex ratios is the introduction of sex-selective abortion, which began in the 1980s in China. Using the legalization of abortion (when prenatal sex-detection was already available) in Taiwan as an exogenous increase in the accessibility of sex-selective abortion, I show that sex-selective abortion significantly increases sex ratios at birth. However, my results also show that banning sex-selective abortion in a context with strong preferences for sons can have the serious adverse con-sequence of lowering the survival rates of girls who are born. (3) Together, these studies show that economic and family...