This essay uses a political economy model to study the relationship between urbanisation and demographic change in China. The model identifies political stability and government capacity as two crucial factors that shape family decisions regarding the number of children. As population growth and economic growth are interrelated, a government can use the political process to achieve its economic objectives. The implications of the model are tested using Chinese data for 1960-95. The results show that, while those in the urban areas are supportive of the model, birth rates in the countryside do not confirm the theoretical proposal. The major policy implication of this discrepancy is that, in order to sustain its economic development, China must urbanise the countryside to facilitate not only economic but also political development so that a set of conditions favouring long-term growth can be generated.
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