Monitor | New 'two-child' rules won't trigger China baby boom

Among the reforms pledged by China's Communist Party at its bunfight last month was a relaxation of the one-child policy.

Rule changes will be implemented at the local level, so the timing and actual extent of the liberalisation remains unclear. But the idea is that in future couples will be allowed to have a second baby if either parent is themselves a single child.

The change is not as revolutionary as it first sounds. For years now, rural families have been allowed to have a second child if the first was a girl. So have urban couples if both come from one-child families.

Even so, investors are elatedly forecasting a baby boom. Since August, when state media reported that an easing of the policy was likely, Hong Kong-listed stocks in mainland manufacturers of baby products have surged.

For example, shares in pram-maker Goodbaby have climbed 40 per cent. Meanwhile, baby food company Biostime has shot up 78 per cent, putting the stock at an eye-popping valuation of 40 times last year's earnings (see the first chart).

Despite all the excitement, however, the likely impact of the policy relaxation on birth rates, and on household spending, remains uncertain.

Clint Laurent, the founder of specialist research firm Global Demographics, calculates that if the new rules are fully implemented from next year, about two million couples will qualify to have a second child next year. On top of that, an additional four million couples will have pre-qualified in earlier years to have a second child under the new regulations.