In 1979, the Chinese government selected to make Chinese communism more open and capitalistic. Under the new leadership of Deng Xiaoping, China revolutionized its policy on fertility and wealth. The government wanted to do more than just equitably divide up wealth; instead, it started focusing on creating economic growth. Deng Xiaoping's famous statement clearly illustrates this policy shift, "[t]o build socialism it is necessary to develop the productive forces. Poverty is not socialism" (Goodman 121). This radical shift in policy transformed the government's attitude toward population and rapid population growth.
In this paper, I will analyze the Chinese government's decision to implement The One-Child Policy in 1979, based on the goal of increasing economic wealth. I will focus on the short-term effects of the change in the GDP per capita growth rates between 1980 and 1999. There has been a great deal of debate on the issue of how population affects economic variables, beginning in 1798 with Robert Malthus' famous theory put forth in, "An essay on the principle of population." I will empirically test the effects of population growth on GDP per capita to identify if there is a significant relationship between the demographic variables and economic variables. The test will also show whether population growth is positive or negative to economic growth.
The One-Child Policy is an excellent case study for analyzing how a change in the population and crude birth rates changes per capita income. China appears to suffer from overpopulation and diminishing returns to labor as, in 1980, 80 percent of the total population lived in rural areas and 4.9 percent [1] of the labor force was unemployed. If Malthus and his followers have correctly identified that population growth is negatively correlated with economic growth a multiple regression analysis will show that birth rates in China are negatively correlated to GDP per capita.