# **1. Introduction**

Over the course of the 1990s, there was a remarkable fall in the national prevalence of child undernutrition in China. According to the 1992 China National Nutrition Survey and the 2002 China National Nutrition and Health Survey, the prevalence of stunting among children under five fell by 42% between 1992 and 2002 (Wang et al. 2007). This was the largest percentage decline in undernutrition experienced by any country during that decade (WHO 2007).

In explaining undernutrition, it is usually observed that child nutritional status is the outcome of a complex interaction of immediate, underlying and basic determinants (Mosley and Chen 1984; UNICEF 1990; Jonsson 1993; Smith and Haddad 2000; Bryce et al. 2008). Empirically, income has been found to be among the most critical determinants of a household’s decision to investment in its children’s nutritional status (see, for example, the reviews by Behrman and Deolalikar 1988; Strauss and Thomas 1995; Chamarbagwala et al. 2004), but other socioeconomic factors and policies can substantially mitigate or accentuate the income effect.

This paper attempts to shed some light on how the observed relationship between income and child nutritional status in China in the 1990s was mediated by two specific areas of policy. First is the one child family policy to which a sharp increase in the number of only-children has been attributed. Second is a protracted period of health system reform which has resulted in increased variation in the accessibility, cost and quality of healthcare, with potential implications for children’s consumption of health services, their incidence of illness and, thus, nutritional status.

The paper commences with a brief description of the one-child policy and a discussion of some key characteristics and consequences of the health system reforms. There follows an elaboration of the theoretical model, a discussion of the data, an explanation of the analytical approach (model specification), and a description of the measurement of key variables. Then, the empirical relationships are investigated using ordinary least squares (OLS), random effects (RE), fixed effects (FE) and instrumental variables (IV) models. The final section explores whether there are income and gender disparities in the magnitude of the measured effects.

# **2. Major policies of the 1990s: the one child family policy and health sector reform**

# **2.1 The one child family policy**

Introduced formally in January 1979, the one child family policy refers not to one policy, but to a cornucopia of legislation and policy prescriptions designed to reduce fertility. Over time, benefits associated with compliance have included extra food rations, better housing, health subsidies, and allotments of farmland. Punitive measures have included fines, the loss of parents’ jobs and the denial of workplace promotions or privileges. At the policy’s peak, second births were forbidden altogether, except in extraordinary circumstances.

It is not easy to generalize about the characteristics of the one child policy, for at least two reasons: First, throughout its implementation, the one child policy has been a very much decentralized policy, resulting in substantial geographic variation in the policy’s rules and the stringency of its implementation – even across very small administrative areas (Scharping 2003). Second, the severity of the policy has varied substantially over time. From an incentive-based structure at its introduction, the policy tightened increasingly until second births were effectively forbidden. In 1983, however, coercive enforcement was prohibited and the range of conditions under which couples could have two children started to expand (Li 2