An ageing Asian tiger

The dynamic Taiwanese economy is about to hit a brick wall because Taiwanese aren’t having enough children.

Taiwan is one of the world’s most dynamic economies. It is the world's leading supplier of IC chips, laptop computers, liquid crystal displays, modems, and personal digital assistants. It has the world’s third largest reserves of foreign exchange and gold. Shrewd economic management helped to insulate Taiwan from the Asian financial crisis of 1998. Taiwan's competitive advantages have come from its strong adaptive ability, a culture of entrepreneurship, a skill at innovation and design, and a flexibility in satisfying the demands of their customers.

But this dynamism could soon grind to a halt simply for lack of people due to Taiwan’s plummeting birth rate. The problem is pressing enough for the government to establish an expert committee. A 25-member Population Policy Committee drawn from government officials and researchers from the Interior and Education Ministries, the Council for Economic Planning and Development and the Department of Health will study what kind of incentives will encourage Taiwanese to have more children.

It wasn’t always like this. Taiwan was under Japanese rule from 1895 to 1945. During those years its population grew rapidly and continued on to the baby-boom era of the 50s and 60s. In 1951, Taiwan’s total fertility rate was between 6 and 7. When it joined the developed world in the mid 70s, its fertility rate started to decline. In 1984, it hit 2.1, the replacement level, and kept falling.

“It took us just 60 years to reach that turning point in the fertility rate,” Tai-Lang Chien, the Deputy Interior Minister and a member of the Committee, told me in an interview. “Last year, the rate went further down to 1.18 percent.”

In 1994, over-65s were just seven per cent of Taiwan’s 23 million population. Last year, they were 9.48 per cent. By 2031, they will make up 15 per cent. “We have joined the ranks of ageing countries,” says Mr Chien.

Taiwan’s over-65 group reaching 15 percent of the population is close to the 19 percent of some developed countries such as Japan and in Europe. However, it will take Taiwan just 27 years (from 1994 to 2031) to reach that level — almost as fast as Japan, which did it in 26 years. The UK took 51 years, the US 66 years, Sweden 88 years and France 131 years.

Quality vs. quantity

The low birth rate and rapid ageing of its population menace Taiwan’s fast-growing economy. Last year, while the international economy grew by 4 per cent, Taiwan’s national economic growth rate reached 5.71 per cent. The 2004-2005 Global Competitiveness Report of the World Economic Forum ranked Taiwan fourth most competitive country after Finland, the US and Sweden.

But this very competitiveness may be partly to blame for its declining population. “In Taiwan’s era of trading and commerce (in the 70s), capital and know-how were the inputs for economic development,” says Mr Chien. “But now, the electronics, bio-technology, and financial services industries are generating demand for new job skills; parents tend to focus more on the ‘quality’ of their children, rather on their ‘quantity.’

But has this focus on children’s quality really paid off? In 1999, the John Tung Foundation, an NGO that promotes understanding of health issues such as smoking, mental health, and organ donation, did a survey of depression. The results were startling: 53.4 per cent of adults and 84.2 per cent of young people had some signs of depression. School work, relationships and exams were the main causes for youth.

This month, the digital newspaper Epoch Times reported that in Changhua, Taiwan’s third largest city, the incidence of suicides over the last three years, has doubled. Last year, the Taipei City government published a pamphlet entitled “Respect Life”. It was not a call to decrease the high number of abortions on the island, but an appeal to secondary students not to take their own lives.

Did Taiwan make a mistake by promoting family planning that limited the number of children per family? Wouldn’t it have been better to focus government policy on raising the economic level of the population instead of limiting it? The minister still insists that this is not the case. “It was not a mistake,” Mr Chien told me. “Neither did other countries like Singapore or Thailand make a mistake in enforcing family planning.” “If we did not solve the problem of over-population then, any improvement in the economy would have been eaten up by a largely uneducated population — our farmers then were having 4 or 5 children.”

“But now that our low birth rate threatens our competitiveness, we need to deal with this situation urgently; “reversing the low total fertility rate is not simply a matter of implementing government policies,” says Mr Chien. “We have to address the people’s attitudes toward having children.”

Leo R. Maliksi is a writer for Taiwan News and MercatorNet's correspondent in Taipei.