Source:
https://scmp.com/news/china/policies-politics/article/1874058/chinas-easing-one-child-policy-will-prove-boon-couples
China/ Politics

China’s easing of one-child policy will prove boon to couples – and businesses

An increase in births could begin providing a boost to the Chinese economy as soon as mid-2016, say experts. Photo: Reuters

China’s decision to abolish its controversial one-child policy and allow all couples to have two children is a boon to would-be parents - and also sellers of goods from baby milk formula to diapers to toys.

It might also help defuse economic stresses caused by an ageing population.

The impact of the surprise change announced on Thursday is expected to be gradual.

Experts said it would take two decades for babies born under the relaxed policy to have a significant effect on the workforce.

However, an increase in births could begin providing a boost to the economy as soon as mid-2016.

With incomes rising in the world’s most populous country, even a small increase in births could translate into higher demand from Chinese that could ripple around the world.

The decision to let all married couples have two children, ending a policy that limited many urban families to one, coincides with official efforts to encourage economic growth based on consumer spending.

The move by Communist Party leaders came on Thursday after they ended a four-day annual policymaking meeting.

Two years ago the authorities began allowing couples in which one parent is an only child to have a second child.

Thursday’s decision to let all married couples have two children coincides with official efforts to encourage economic growth based on consumer spending.

The fifth plenum of the party's 18th Central Committee also endorsed a new five-year economic plan, according to a communiqué released by Xinhua. 

Wei Guang, the father of an eight-year-old son, said he and his wife already were considering whether to have a second child, even though the cost was daunting.

Wei said food, clothes, nannies, after-school lessons and other expenses could cost 100,000 yuan (US$16,000) a year.

“We know the cost will be substantial,” said Wei, 51, who works in media and whose wife is in her 30s. “But we can manage.”

Citigroup researchers said they expected a 5 per cent to 10 per cent rise in Chinese births.

The one-child policy had been intended to conserve resources at a time when widespread poverty would have been worsened by unregulated population growth.

The ruling Communist Party has said it led to 400 million fewer births. But that also caused China’s average age to soar, prompting concern about whether a shrinking workforce could support a growing pool of retirees.

China already had one of Asia’s highest median ages at 37.3 years in 2014, and that could rise to 40 by 2025, said Media Eghbal, who is head of countries’ analysis at the research firm Euromonitor International.

The size of China’s working-age population, aged 15 to 64, was set to decline starting next year, Eghbal said.

The latest change “is significant and likely a response to the pressures that have been building”, Eghbal said.

Seth Kaplowitz, a lecturer in finance at San Diego State University, who worked in China’s real estate industry in the late 2000s, said: “Having the birth rate go up will definitely stimulate the economy.”

Kaplowitz predicted that an increase in babies would eventually provide a “whole new base of opportunity” for US and other consumer products companies.

A string of Chinese product safety scandals has helped boost demand for imported milk, food and baby care products, allowing foreign brands to charge premium prices.

On Thursday, shares of the US company Mead Johnson Nutrition, which makes Enfamil and other baby milk powder formula, rose more than 3 per cent. The company earned more than half its revenue between July and September from Asia.

“China is an important market for us, and we will be carefully monitoring this latest policy adjustment,” said Chris Perille, a company spokesman.

Jeremy Haft, an entrepreneur who does business in China, said the one-child policy had damaged the country demographically, but faster population growth brought on by the end of the policy was a business opportunity worth trillions of dollars over time.

“All these people will need to be fed, clothed, housed, healed, powered, transported, and networked,” Haft said.

The birth limits that were enacted in 1979 dramatically changed the status of children in Chinese society.

Even families with modest incomes lavish money on their “little emperors”, paying for dance, music and English classes.

Su Weihua, the mother of an eight-year-old daughter in the southern city of in Guangzhou, said she was making plans to become pregnant next year. She already is thinking about how to pay for a second child.

“I think we may spend less on things like travelling, luxury goods, expensive new phones or a bigger house,” said Su, 36.