Increase in the number of households in China

Increase in the number of households in China

Description:

The number of households in China is projected to increase due to a number of trends including an increase in the divorce rate, changes in social norms, increased affluence, increased urbanization, and government support for home ownership. This increase in the number of households has severe implications for China's energy consumption and its subsequent affect on the environment. The increase in the number of households could also create one of the biggest markets for home appliances and furniture.

Enablers:

1. Increased population growth: More houses are needed as the population grows.
2. Increase in divorce rates: Divorces have increased sharply owing to simplified divorce procedures and wider societal acceptance of divorce. In 2004, more than 1.6 million couples filed for divorce, up 21% from 2003. Divorces hurt the environment because they double the number of households and reduce the household size, increasing per capita resource consumption and waste. [1]
3. Change in social norms: There has been a decline in the number of households where several generations live under one roof. Many older people now live alone, rather than with their children and grandchildren. [1]
4. Economic growth and increased affluence: As China grows and becomes a more affluent nation, people no longer need to share their house with others (i.e., family members) in order to be able to afford the rent/mortgage.
5. Increased urbanization: China has been experiencing increasing urbanization over the last fifty years. From 1952 to 2003, while its total population ‘merely’ doubled, its proportionate urban population tripled from 13% to 39%. [1] People move out on their own as more housing becomes available and affordable in cities.
6. Government support for home ownership: The Chinese government has encouraged home ownership by offering incentives ranging from tax breaks and easier credit access. One major preferential policy effective from November 1, 2008 saw the property deed tax decline to 1% from 1.5% for people buying their first homes if they are smaller than 90 square meters. Also, for those buying their first homes, the down payment requirement will be lowered to 20% from 30%, and banks will be allowed to charge as little as 70% of the benchmark lending rates for such mortgages. It also removed the 0.05% stamp tax and land value-added tax for home purchases. Real estate investment is the second-largest contributor to the country's urban fixed-asset investment, which is a major driver of the overall economy. [3]

Inhibitors:

1. Decreased population growth: If China's population growth significantly declines then less households will be needed.
2. Declining economic growth rate: If China's economic growth and growth of affluence slows then people may not be able to afford separate housing.
3. Decrease in building material availability: Urbanization will decrease and new construction will decrease if there is a shortage in building materials.
4. Change in societal norms: The number of households will decrease if new generations decide to live with their families and take care of older generations.
5. Increase in housing taxes: If the Chinese government starts to increase housing taxes then less people will be able to afford separate housing.
6. Government restrictions: The Chinese government may decide to implement government restrictions on the construction of new housing in order to prevent further harm to the environment.
7. Shortage in natural resources: If natural resources such as water become scarce then new construction activities may be stopped.

Paradigms:

• Because smaller households consume more resources per person, China’s rapid increase in household number and reduction in household size will have significant negative environmental consequences. These consequences include increased energy consumption, increased pollution, and a reduction in biodiversity. Going forward China will have to determine whether it can sustain this growth in the number of households.
• More households mean increased consumption for home appliances, furniture, etc. This increased consumption will create more domestic demand for goods and given China's population size there is potential that China may become its own biggest market. If China were to become its own biggest market then world trade would decrease.
• An increase in the number of households and trends where fewer generations live under one roof may indicate a change in Chinese family dynamics. Whereas China has always had a history where collectivism and the importance of the family unit have prevailed, this trend may indicate that the Chinese are moving towards a more individualistic society.

Timing:

• Early 1950s - Drastic increase in the number of households and a sharp reduction in the mean size of households were recorded after the land reform in the early 1950s. [2]
• 1998 - Affordable housing programs were introduced on the mainland and modeled on public schemes in Hong Kong. [3]
• 1985-2000 - The number of China's households grew almost three times as fast as its population during 1985-2000, because average household size decreased from 4.5 to 3.5 people. This alone gave China an extra 80 million households in 2000. [1]
• 2020 - The urban population is expected to grow by 20 million every year, accompanied by construction of 2 billion square meters of buildings every year through 2020. [1]
• 2030 - Despite a fall in the population growth rate, the number of Chinese is projected to reach almost 1.5 billion by 2030. The project drop in household size to 2.2 people by the year 2030 alone will add over 250 million new households--more than the total in the entire Western Hemisphere in 2000--even if China's popluation size remained constant. [1]

Experts:

• Zhongwei Zhao - Researcher in demography and mortality in East Asia
• Jianguo Liu - Professor, Fisheries & Wildlife, Michigan State University. Research interests include conservation ecology, human-environment interactions, systems modeling and simulation, and impacts of human population and activity on spatio-temporal dynamics of endangered species.
• Gretchen Daily - Professor, Department of Biological Sciences; Senior Fellow, Woods Institute for the Environment; Director, Center for Conservation Biology

Web Resources:

1. Liu, Jianguo. 2005. China's Place in the World: Environmental Impact of a Giant
2. Zhongwei & Wei. 2008. Changes in household formation and composition in China since the mid-twentieth century.
3. Liu, Daily, Ehrlich, Luck. (2003). Effects of household dynamics on resource consumption and biodiversity.
4. Li, R.. (2008). South China Morning Post. Xiamen unveils scheme to boost affordable housing programme.
5. PBS. (2006). China's Environmental Future.

Revision History:

1. Created by Johanna Little, September 14th, 2009