China's One-Child Policy Cash Machine

Money collected from fines is meant to finance social services. Instead, it lines politicians' pockets.
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A young girl walks with her grandmother at a market in Beijing. (Kim Kyung-Hoon/Reuters) 

Perhaps China’s most famous film director, Zhang Yimou, is known for bringing Raise the Red LanternThe House of Flying Daggers and Hero to the silver screen. Lately, however, he’s better known for something else. Throughout the last half-year, Zhang has been dogged by rumors that he sired seven children—and that’s not the truly scandalous part. The real issue was that he hadn’t paid fines levied on most urban couples who have more than one child, according to rumors.

The scandal had legs—enough so that, last weekend, Zhang finally came clean, declaring that he and his actress wife would be submitting to a local government investigation for dodging fines for their two sons and one daughter.

Even for Zhang, these “social support fees,” as extra-child fines are known, aren’t pocket change. One legal expert estimates he could owe as much as $26.3 million, as such fines can be linked to household income (though it’s unclear how many extra children that estimate is based on).

Regular people find these fines no less exorbitant. In Jiangsu province, where Zhang lives, couples with three children (i.e. two more than they’re legally allowed to have) must pay between five and eight times the combined annual income of both spouses, as the Wall Street Journal reports. In Beijing, couples had to pay nearly $40,000 for an extra child in 2012, according to China Economic Weekly, though fines can go as high as $176,000.

Only in the last year or so did the government reveal that it collects around $3 billion a year in “social support fees.” But that seems low.

Using a legal technique that resembles the U.S.’s Freedom of Information Act requests, a lawyer named Wu Youshui found that, in 2012, 17 out of 31 provinces brought in a combined $2.6 billion. While Jiangxi province officials pocketed around $550 million in fines, Sichuan province collected $394 million. After holding out for months, Guangdong province today revealed that its residents had coughed up $239 million last year, reports China News Net. So far in 2013, 23 provinces brought in $3.1 billion in fines.

Local governments are supposed to spend revenue reaped from extra-child fines on social services that the additional children, in theory, require. Wu’s audit reveals that hasn’t been happening.

“Not even one province can provide information about using and auditing the fines,” Wu told Reuters in September. Last July, Wu said he’d “found the majority of those fees went into local authorities’ pockets.”

The government just relaxed the one-child policy, allowing couples made up of two only-children to give birth to a second child. Everyone else still must pay. In Beijing, as of last spring, couples that included just one only-child spouse were on the hook for fines of 300,000 yuan ($49,247) for bearing a second child. And for those that refuse, the government has ways of making people pay. In 2012, a man named Yang Zhizhu refused to pay for his second daughter, reports The Economist. His protest turned out to be futile: The government simply withdrew 240,300 yuan from his wife’s bank account.

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Gwynn Guilford is a reporter and editor for Quartz.

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