Population Control Is Called Big Revenue Source in China; Nineteen province-level governments in China collected a total of $2.7 billion in fines last year from parents who had violated family planning laws

September 26, 2013

Population Control Is Called Big Revenue Source in China

By EDWARD WONG

BEIJING — Nineteen province-level governments in China collected a total of $2.7 billion in fines last year from parents who had violated family planning laws, which usually limit couples to one child, a lawyer who had requested the data said Thursday. The lawyer, Wu Youshui of Zhejiang Province, sent letters in July to 31 provincial governments asking officials to disclose how much they had collected in 2012 in family planning fines, referred to as “social support fees.” He said he suspected that the fines were a substantial source of revenue for governments in poor parts of China.“We want to shed light on how the current family planning policy works,” Mr. Wu said via telephone. “Many are debating reform of the family planning policy. Learning how it works may help with that debate.”

Mr. Wu’s findings were first published Thursday by Beijing News. Mr. Wu opposes China’s one-child policy and has written on his microblog he is a Christian.

Last year, some prominent scholars and policy advisers started a major effort to push central officials to fundamentally change or repeal a law that generally punishes families for having more than one child. That push comes as economists point out that China’s economic growth rate is likely to slow because its pool of cheap, young workers is dwindling as the population ages.

The 2010 national census showed that the average birthrate for a Chinese household was 1.181; it was lower in cities and higher in rural areas. Some scholars say that number is extraordinarily low, and the real figure is probably a bit higher.

The family planning regulations are prone to abuse because local officials are often evaluated by their superiors based on how well they keep down the populations of their areas. There have been well-known cases of forced abortions or sterilizations across China. Last year, Chinese Internet users sympathized with the plight of Pan Chunyan, who said she had been abducted by officials in Daji Township when she was eight months pregnant with her third child. The officials forced her to have an abortion at a hospital. In June 2012, another woman, Feng Jianmei, was forced to abort a 7-month-old fetus in Shaanxi Province, in a case that also ignited national outrage.

Parents in other parts of China have accused local family planning officials of abducting babies who are considered “extra” children in a household and selling them to orphanages, sometimes for $3,000 per baby.

The Beijing News report said Mr. Wu, the lawyer, obtained data showing that Jiangxi Province had collected the most in fines of the 19 provinces that replied to him; it amassed $554 million in 2012. Sichuan was second with $400 million, and Fujian was third with $340 million. The provinces that collected the least were Qinghai, with $572,000, and Ningxia, with about $2 million. Both have low populations compared with most other provinces, and they are also home to many rural residents and ethnic minorities, who have more leeway in the number of children they can have without incurring fines.

The 12 province-level governments that did not provide data told Mr. Wu that the fines were collected at the county level and used there, so the provincial governments had no information.

On Sept. 18, the National Audit Office published a report on the collection and spending of the “social support fee” after it reviewed nine provinces. The office looked at five counties in each of those provinces. It found that “extra” children were not properly counted, that there were no uniform standards for collecting the fees and that management of the fees was poor.

Mr. Wu said that he suspected that the fines had been “managed in a chaotic way,” and that it appeared that county-level officials overseeing the punishments had been unsupervised.

He said the fee should be abolished altogether, and “it should be the family’s decision how many children to have.”

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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