HONG KONG (MarketWatch) -- More than three decades after China formalized its one-child policy, the population-control program no longer applies to most Chinese and looks set to be abolished.

While government statistics aren't publicly available, a widely cited figure from state-media reports shows less than 36% of the country's population was subject to the policy, as of 2007.

But even this low number may overstate compliance with the once-strict rule that bars Chinese couples from having more than one child. Current exceptions abound -- including allowing a second child for many rural families, almost all ethnic minorities, families where both parents are themselves only children, and many other cases.

And for those targeted under the policy -- such as residents of Beijing, where the one-child rule is said to be more strictly enforced than in many other parts of the country -- financial penalties, either in the form of fines or exclusions from benefits, are the main deterrent.

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"There is no punishment [for having a second child], just the need to spend money to obtain the hukou [registration papers]," said a Beijing mother of a second child, who asked not to be identified.

"If you don't want a Beijing hukou, that's no problem. You can send the [second or third child] to a private school, send them to an overseas university, or else go to Hong Kong and give birth there," she said.

Hukou documents are crucial to allow citizens access to public services, including schooling, medical facilities and jobs. Couples having more than one child in contravention to the policy must pay a fine to register their additional children.

Fines assessed for having additional children are calculated as a multiple of the per-capita gross domestic product in the parents' domicile. For example, residents of Guangdong province in southern China -- one of the nation's most populous -- found in violation of the policy may be required to pay a fine that could be up to six times the family's income in the previous year.

However, such penalties aren't always strictly enforced, and as a result, they have met with limited success in dissuading high-income families from having a second, or even a third child. Recent Chinese media accounts have highlighted an increasing number of well-to-do couples who have more than one child by paying the fines.

The official version, meanwhile, stays unchanged.

"I believe the policy is slowly being relaxed and will eventually be removed. But there is a bureaucratic machinery that now protects the existing system, so I think this will take time," said John Bacon-Shone, associate dean for research at the faculty of social sciences at The University of Hong Kong.

In fact, intense speculation that China may allow couples to have two children recently forced officials to formally refute them.

Zhao Baige, deputy director of the National Population and Family Planning Commission of China, said last month that China's family-planning policy will remain unaltered during the 12th five-year plan, which is slated to run from 2011 to 2015.

Pursuing zero-growth

To be sure, China is paying a heavy social cost for the one-child policy and has reasons to kill the rule.

A rapidly ageing population without an adequate social-security net and shrinking ranks of young workers present a demographic time-bomb for the nation.

The fertility rate is now estimated between 1.6 and 1.9, already below the replacement level of around 2.1. So if the current trend continues, the population is forecast to start declining within a couple of decades.

And other side effects from the policy pose problems. In the past, stories abounded, for instance, of some Chinese couples seeking to have a son and aborting daughters, to the point where doctors are now generally forbidden by law to tell pregnant women the sex of their child-to-be.

Siu Yat-ming, associate dean and associate professor of sociology at Hong Kong Baptist University, pointed out that when China initially introduced the one-child policy, it was only meant to be in place for one generation and was aimed at slowing the rate of growth, not reducing the population.

Siu, an expert on Chinese demographics and family-planning studies, said the administration is pursuing a "zero-growth [population] policy," and one reason policy makers haven't ended the one-child policy as yet, is that they fear a return to unbridled population growth.

In the early days of the People's Republic of China, couples were encouraged to raise large families. Officials now maintain that without the family planning policies introduced in the late 1970s, China's population would have risen to over 1.7 billion by 2008 -- higher than its population today by more than 350 million, equivalent to the population of the U.S. and Canada put together.

This concern, says Siu, is the reason for caution.

"They are afraid of giving the wrong signal to the population. They will do it step by step, and not open the policies so quickly," he said. "They are already doing experiments -- relaxing policies in rural areas and seeing the results. ... If they find that they can control [population growth], then they will do it on a larger area."

Even when China does officially lift the one-child rule, the country may continue to have family-planning policies in place to prevent a return to the explosive growth in its population, said Siu.

Chinese officials contacted by MarketWatch weren't able to provide immediate comment for this report.

Peer pressure and consumer culture

While China's one-child policy has drawn criticism, especially outside the country, its general acceptance by the Chinese population can come as a surprise. An often-quoted 2008 survey by the Washington, D.C.-based Pew Research Center showed that nearly 76% of China's population supports the policy.

Meanwhile, anecdotal evidence suggests mixed views on those who do have additional children.

Gao Dacheng, an IT professional living in Beijing, says wealthy couples with multiple children are "admired" as they can afford better education and lifestyle for their offspring. However, the poor or ill-educated parents having addition children "are thought to be stupid," particularly those who "never stop bearing children until they get a boy," he said.

Gao said he himself doesn't plan on having a second child, though he knows others who do.

Michael DeGolyer, a professor at the government and international studies department at Hong Kong Baptist University, says attitudes to both the policy and its breach are tied to a cultural pressure to conform.

He says Chinese society has "this incredible tradition of peer pressure and moral pressure on behavior" and a "tradition of preaching what you should and shouldn't do that could actually put Christianity to shame."

But DeGolyer says such attitudes can change, citing the Chinese preference for male children. In the old days, some women would go as far as to commit suicide if they couldn't have a male child to carry on the family name. But a new "consumer culture" is changing that preference, as China's development creates a more prominent economic role for women.

"Having a child is totally different from what it used to be. [Earlier], you would have children to support you during your old age and carry on the family name. But now, it's also applying to wealth and connections and influence," DeGolyer said.

But in terms of the one-child policy, attitude may be less of a factor than the growth of China's cities.

In 1978, less than 18% of China's population lived in urban areas. Three decades later, the figure had surged to nearly 46%, as the Chinese economic engine created millions of jobs that enticed would-be farm workers to the cities.

As a result, DeGolyer says, China's population growth may change little, even if it ends the policy completely.

"In no country have cities been generating population. They've been consumers of population. It's the rural regions which generate population," said DeGolyer.