* One-child policy began three decades ago to limit spiralling population
* China's working-age population fell for first time in 2012
* Elderly population will hit 320 mln in 2030, up from 200 mln (Edits)
By Sui-Lee Wee and Hui Li
JIUQUAN, China, Jan 22 (Reuters) - China could be considering relaxing its harsh one-child policy because of women like Hu Yanqin, who lives in a village at the edge of the Gobi desert.
Hu lives in the Jiuquan region in Gansu province, one of the rare places in China where those living in rural areas have been free to have two children since 1985. But even when she got married seven years ago, she knew she was going to have only one child, because it was too expensive to have more.
"Those people with two children are those who are better off," said Hu, 32, dropping her six-year-old son off at kindergarten. "The majority of people in my village only have one child."
Advocates of reforming China's one-child policy use Hu and millions like her as evidence that relaxing the law will not lead to a surge of births in the world's most populous nation.
Jiuquan has a birth rate of 8 to 9 per 1,000 people, lower than the national average of about 12 births per 1,000 people.
The policy, implemented since 1980 alongside reforms that have led to rapid economic expansion, is increasingly being seen as an impediment to growth and the harbinger of social problems.
The country's labour force, at about 930 million, will start declining in 2025 at a rate of about 10 million a year, projections show. Meanwhile, China's elderly population will hit 360 million by 2030, from about 200 million in 2013.
"If this goes on, there will be no taxpayers, no workers and no caregivers for the elderly," said Gu Baochang, a demography professor at Renmin University.
China's top statistician, Ma Jiantang, said last Friday that the country should look into "an appropriate and scientific family planning policy" after data showed that the country's working-age population, aged 15 to 59, fell for the first time.
Economists say the policy is also responsible for China's high savings rate. A single child often must take care of two - and four in the case of married couples - retired parents, increasing the likelihood that working adults will save money for their old age rather than spend.
That has delayed the "rebalancing" of Beijing's economy toward more consumption, a step economists believe China needs to take to keep its growth going.
Expectations that Beijing will ease the restrictions, by gradually allowing couples to have two children, have been building since outgoing President Hu Jintao conspicuously dropped the phrase "maintain a low birth rate" in a work report to a Communist Party congress in November.
It was the first time in a decade that a major speech by a top leader had omitted such a reference and could signal that the new government led by Xi Jinping is leaning toward reform.
"I think that the 18th Party Congress report indicates that, and this is my personal interpretation, the one-child policy is going to be adjusted," said Ji Baocheng, a delegate to China's rubber stamp parliament who advocates change in the policy.
The one-child policy covers 63 per cent of the country's population and Beijing says it has averted 400 million births since 1980.
Its enforcement can be brutal. Couples who flout family planning laws are, at minimum, fined, some lose their jobs, and in some cases mothers are forced to abort their babies or be sterilised.
Last summer, a woman who was seven months pregnant was forced to have an abortion, triggering outrage on China's Internet and international condemnation.
But evidence has been mounting for years that the policy may be unnecessary to control population growth.
In 2008, Renmin University's Gu and the Brookings-Tsinghua Center for Public Policy published a study on two-child policy programmes in four regions, home to about 8 million people. They concluded that the high cost of having children is enough to hold down birthrates, but the freedom to have a second child results in a less skewed gender disparity.
The next year, sources told Reuters, the National Population and Family Planning Commission decided, as a first step, to expand pilot programmes to relax the policy in four to five other regions.
The proposal was dropped for lack of a consensus among the leadership, according to a person familiar with the discussions.
The new leadership in Beijing, which assumes power formally in March, is likely to make another run at change, reform advocates believe.
"The adjustment of the policy is certain, it's only a question of time," said a recently retired official from the family planning commission, who maintains close ties with the agency.
BOYS AND GIRLS
A skewed gender ratio is another unwelcome effect of the one-child policy.
Like most Asian nations, China has a traditional bias for sons. Many families abort female foetuses and abandon baby girls to ensure their one child is a son, so about 118 boys are born for every 100 girls, against a global average of 103 to 107.
In Jiuquan, there are 110 boys for every 100 girls, far less skewed than the national average, because of the freedom to have two children.
Tian Xueyuan, one of the drafters of the original one-child policy, told Reuters that he had warned top officials nearly a decade ago of the flaws.
"A substantial portion of China's men will not be able to find a match ... and that will be a major factor of social instability," Tian said he told party leaders.
The usefulness of the one-child policy, he said, has run its course. "It's a special policy with a time limit, specifically, to control the births of one generation," Tian told Reuters.
Still, there are significant pockets of resistance. Last week, Wang Xia, the minister in charge of the family planning commission, said China will "unswervingly adhere" to its family planning policy.
Her remarks dismayed reformers expecting change from the new government, and ignited an outcry among Chinese Internet users.
Analysts said Wang's remarks did not necessarily reflect the thinking of the incoming government. The commission declined to comment.
In Jiuquan today, though the one-child policy is relaxed, women are still subject to strict family planning rules. They are fitted with intra-uterine devices after their first child, sterilised after their second. Anyone who defies the two-child quota pays a 30,000 yuan fine.
Few do. The women in Jiuquan complain about expensive school fees and other expenses of bringing up children.
"It's hard to raise a child," said Xing Juan, a 26-year-old with one son. "The burden is heavy." (Editing by Bill Powell and Raju Gopalakrishnan)