China’s one-child policy was implemented in 1979 to control population growth. However, the restrictions have never applied to all nationals of the People’s Republic. Ethnic minorities, rural couples and couples who are both only children themselves are allowed to have 2 children. Furthermore, multiple births are mostly regarded as a single child.
Parents, who have more than the allowed number of children are punished by high fees and / or loosing various benefits. They may even lose their jobs. Forced abortions and sterilizations are brutal methods of executing the law. However, wealthy families can have more children, if they pay a special fee to the government, give birth in Hongkong etc.
The reality looks a little different. In addition to families that respect the law I actually know a couple of “normal Han-families”, who have found a way to go around the strict rules and have 2 or more children without being punished for it.
The negative effects of the policy, that should have been revised a long time ago according to many experts, are evident today. There are 15 – 20% more males than females today (depending on source). It is difficult for Chinese men to find a wife. This is evidently causing social problems. Another difficulty is that the working population has to support an ever growing aging population. Experts believe that simply not being able to afford more than one child is going to restrict the population growth in the future.
If you want to read more here is a link to a Guardian article on the topic China thinktank urges end of one-child policy .