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China’s infamous one-child policy is finally over. Here’s why.

A young Chinese boy hangs from bars while exercising with his mother at a park on September 17, 2014, in Beijing, China.
A young Chinese boy hangs from bars while exercising with his mother at a park on September 17, 2014, in Beijing, China.
Kevin Frayer/Getty Images

On Thursday, Chinese Communist Party authorities made a huge announcement: China's one-child policy, which had long banned most Chinese families from having multiple children, was being repealed. From now on, China's official Xinhua news agency reports, Chinese couples will be allowed to have two kids.

According to Xinhua, the reason behind the policy change is clear: Chinese authorities are "actively taking steps to counter the aging of the population." This is a massive problem for China. The UN projects that the share of the Chinese population over 60 is likely to increase from 12.4 percent to 28.1 percent between 2010 and 2040. "This increase," per a UN report, "will be the fastest in the world."

The reason China's population is graying is also clear. Its formerly high birthrate has plummeted as a result of the country's rapid economic development and the one-child policy, as this OECD chart of China's birthrate over time shows:

So China had a huge population boom in past decades, but hasn't produced enough young people recently to make up for it. That means the overall population is graying — creating a host of social and economic problems for the country.

"It leads to a drop in the proportion of the productive labor force, which in turn raises the average wage level, making China less competitive in labor-intensive industries," Council on Foreign Relations China expert Yanzhong Huang writes in the Diplomat. "If China is approaching its Lewis turning point, a point at which China would move from a vast supply of low-cost workers to a labor shortage economy, it could quickly lose its competitive edge to other emerging economies that still enjoy significant demographic dividends."

But here's the really scary thing for China: It's not obvious that ending the one-child policy will solve its demographic crisis. The one-child policy is not, on its own, the key cause of China's graying population — those include China's growing prosperity and increasing opportunities for Chinese women outside the home. It's not obvious that repealing the one-child policy now would be able to make up for the difference.

"As UNC demographer Yong Cai has shown, today, even when fertility restrictions are lifted fertility rates don't rise," University of Maryland sociologist Philip Cohen writes in the Atlantic. "People have few children in China today because children have become too expensive—good schools especially cost too much, and the health care burdens of children outweigh the hoped-for future return of a child to care for parents when they're retired."

So add aging to to the list of major problems for a country already dealing by a slowing, teetering economy.