The Li-Zhou household operates like most middle class Chinese families. Grandma is over on a Saturday morning, helping take care of the young couple's precocious five-year-old daughter. A housekeeper, called "auntie" though she's no relation, quietly cleans the breakfast dishes.
What's different is the baby dozing peacefully in a crib in the master bedroom. Two months ago, the couple had a second daughter, making them a rarity in a country that for three decades has tried to limit population growth with a harsh one-child policy, fearing an exploding population would leave the country caught in a cycle of inescapable poverty.
It's a policy that has resulted in 400 million fewer births since its introduction in 1979, leaving China a nation with a dearth of brothers and sisters.
"If there was just the one child, she'd be lonely," said Grace Li, a 34-year-old human resources professional and mother of two, while her husband and mother kept watch over five-year-old Zixian, who dashed back and forth between playing with her toys in the living room and peering over the edge of her sister's crib. "In our generation, we still had cousins that we grew up with. But my daughter has no cousins at all."
Having a second child is so unique in Shanghai that Zixian has taken to bragging about her little sister to her kindergarten classmates. "She shows off in kindergarten, telling the other kids 'I have a little sister.' Some of them say they have sisters too, but Zixian says 'yes, but mine was born by my own mother.'" The couple didn't break any laws to have their second daughter, Zining. Because Ms. Li and her husband Frank Zhou were both only children themselves, they qualified under a special exemption for Shanghai residents to have a second child.
For more than a decade, this city has allowed couples who meet one or more of a dozen criteria – the most common is that both parents were only children themselves – to have a second baby, a practice now followed in most Chinese provinces. But in recent months, Shanghai authorities have, for the first time, begun encouraging couples to take advantage of the loophole, sliding pamphlets under doors and offering counselling sessions to eligible couples interested in having a second baby as a city with one of the world's lowest fertility rates faces the demographic challenges created by 30 years of birth restrictions.
The city that has driven much of China's startling economic expansion is growing old fast. After three decades of benefiting from having artificially few dependents to feed, Shanghai now has a rapidly growing over-60 population and a shrinking labour force. Already, the city's modest pension fund pays out more than workers pay in, a problem that will grow more acute as millions retire in the next few years without enough young people replacing them in the work force.
And while the situation is most acute here, the problems Shanghai is experiencing are far from unique in this country. Chinese population experts say that the publicity campaign aimed at reminding Shanghai parents they might be eligible to have a second kid will be followed by high-level debate within the Communist Party apparatus on the one-child regime. Some expect the result to bring an end, or at least dramatic change, to one of the Communist Party's most controversial and intrusive policies.
That change could come as early as 2011, when Beijing unveils its next five-year plan for the development of the country.
"The country's leadership realizes the problem. In China, most of the experts in population research have already suggested [changing the one-child policy] There is a consensus among scholars on the subject," said Zhou Haiweng, a population expert at the Shanghai Academy of Social Sciences, a government think-tank. Then he adds a line that could affect the lives of hundreds of millions of Chinese couples: "We estimate that during the 12th five-year plan, there will definitely be some change in this policy."
Judged by its own goals, the one-child policy has largely been a success. China was able to stop runaway population growth, and the population has grown far richer during that time, partly as a result, even though social problems such as abortions and an unnatural gender imbalance have soared.
But now the economic reckoning has arrived. Shanghai's birth rate, at just 0.88 per woman, is less than half the national average and even lower than in such rapidly aging societies as Japan and South Korea. Already, more than 20 per cent of the city's population is over the age of 60, and that proportion is set to double by 2050.
Birth rates usually fall as a society becomes richer, but China is set to be the first low-income country to have to deal with the a rich country's demographic challenges. In addition to low birth rates, Chinese are living longer. The average lifespan is now 73, up a remarkable 32 years since the establishment of the People's Republic in 1949.
Much of the country has no pension insurance, and in places such as Shanghai that do, the city's modest plan is already paying out more than workers pay in, a situation that will get dramatically worse as the years go by and more workers retire without anyone taking their place in the labour force. Nationally, in 20 years there will be just 1.6 working age adults per pensioner, down from more than seven before 1979. And those workers aren't rich – for all China's recent economic progress, per-capita-annual income here is still just more than $5,000, a fraction of what it is in developed economies facing the same demographic problems.
To partially head off the problem, Beijing has repeatedly pledged to introduce a national pension program. The difficulty, however, lies in devising one that takes care of the growing number of elderly without overburdening their children and grandchildren.
Shanghai's answer – to promote the loopholes in the one-child law so there will eventually be more workers to support the city's growing number of retirees – is being combined with steps to liberalize the city's strict hukou registration system for rural migrants who come to the city looking for work. But the city believes the long-term answer is to have more Shanghaiese children.
"In the past, many [of those eligible to have a second child]did not pay attention to the two-child policy," said Zhang Meixing, a spokesman for the Shanghai Population and Family Planning Commission. "We will do more publicity and guiding and report every year on the fertility rate to let people know when it is a baby boom year and when it's best for them to have a child."
While the number of couples applying to have a second child has increased slowly, from 5,600 in 2005 to more than 7,000 in 2007, Mr. Zhang said those numbers still represent only a tiny amount in this city of 19 million people. Three decades of restrictions seem to have created a new set of barriers – some cultural, some economic – to families having second children.
"Many people feel that to have only one child is to do their part for the country. Many ordinary folks do not understand the situation, the population problem we will have in the future," said Mr. Zhou, the demography expert with the Shanghai Academy of Social Sciences. "Because they have only one child, they don't rely on that child for retirement. They rely on society for support. But if each family has only one child, social support is an empty promise."
At a government-run family planning centre in the upscale Pudong side of the city, it's Jiang Leiji's job to meet young couples and counsel them about parenthood options. The centre hands out "Having Another Child" pamphlets to drop-ins, as well as towel packs in a container listing the 12 exceptions to the one-child policy on the outside. "It's hard to say how many people are interested in having a second child, but it's not common," Ms. Jiang says, sitting on a couch in the centre's reception area, which is deserted on a Thursday afternoon.
Ms. Jiang, herself the mother of a 3-year-old boy, says most of her friends are eligible as only-children themselves, but few are considering having second kids. "Some say they're under a lot of pressure, so one is enough," the 30-year-old says, adding that she and her husband have no immediate plans to have a second child themselves. "I feel it's a little bit hard to feed and train one child. We want to be with him as much as we can."
The irony of Shanghai's exemption policy is that the city is struggling to convince some young couples to have an extra child, while at the same time imposing harsh financial penalties on others who don't qualify, but are determined to expand their families.
Ji Yaowu and Bian Yuhui brought home their first child, a son, six months ago, and already are planning to have a second child even though it could mean having to pay a fine of up to three years' wages – nearly $100,000 in their case.
The couple doesn't qualify under Shanghai's exemption program because Mr. Ji, who was born in 1979 just before the one-child policy was introduced, had an elder brother. But that's also exactly why he's so keen that his son have a sibling.
"I remember my childhood, and I want my child to have company too – even though we will have to pay the penalty," the spiky haired Mr. Ji says, casting a meaningful glance at Ms. Bian, a pretty and practical 28-year-old who admits she's more worried than her husband about the $100,000.
Mr. Ji, who works as a shipping broker, says the couple can live with the financial penalty, even if it makes life hard for a while. But he's well-versed in Shanghai's growing demographic problem, and wonders why the government would want to fine a young family that wants to raise the children – and future workers – the city's economy desperately needs.
The one-child policy has worked for China for a long time, he says – shuddering at the idea of even more people living in Shanghai than there already are – but the city and the country are richer now and the birth restrictions are out of date. More young people, he says, are needed to help pay for the growing number of elderly.
His father-in-law, 58-year-old Bian Zhengui, smiles but says little as Mr. Ji boasts of being able to afford the massive fines to have a second child. Such talk is completely foreign to someone who was born during a time when China was isolated and impoverished, and who lived through the Cultural Revolution, when speaking out against government policy was tantamount to a death wish.
Still, Mr. Bian, who acknowledges he and his wife will rely financially on his daughter and son-in-law in retirement, knows progress when he sees it. "I think they should loosen the policy and make more people eligible to have second children," he says watching his wife comfort his wailing grandson.
But does he ever regret not being able to have a second child? The question provokes hearty laughter, and an affectionate glance at his only daughter.
"No, no, no. We were too tired. One was enough cost and work for us."