"Failure to share the cake properly at this point will probably widen [China’s] income gap and dampen economic growth from the demand side"
China is implementing all of Dr. Cai's recommendations and then some.
Every woman of child bearing age has a relative in the Party, and every one of those relatives will ask her what it will take for her to have a(nother) baby.
Then the Party members will pool all that feedback and pass it along to CASC for policy development.
There are dozens of interventions like that being made right now.
Unfortunately for Godfree’s theory, interventions in the fertility rate do not work when not backed by staggering levels of state compulsion, which no modern Chinese woman will tolerate if there’s any sort of choice on offer. Perhaps the Chinese state will become the sort of totalitarian hellhole which forces women to bear children they don’t want, but I think we all hope not.
The real requirement is for an extraordinarily rapid pivot from investment-led growth to consumption-led growth, a Fordist model in which the Chinese people enjoy a sufficient fraction of their productivity to be able to afford to consume most of the fruits of their labor and import goods from other nations besides. That is not being adequately pursued and likely cannot be, if the historical records of Germany, Japan, South Korea, and Taiwan are any indicator.
It would gore too many politically connected sacred cows, require a thorough allocation of credit losses amongst the public sector from the last decade of over-investment, all in pursuit of a set of goals in which Party leadership is just not convinced.
So unfortunately, continued credit expansion, BRI-like efforts to gin up export markets for products unneeded at home, and ultimately Japanese-style struggles to maintain growth, seem to be the order of the day.