For all the historic significance of China’s decision to abandon its one-child policy, the move risks falling well short of reversing a trend that threatens to throttle economic growth.
It is “too little, too late,” said Shanghai-based Andy Xie (謝國忠), a former Morgan Stanley chief Asia economist, about the Chinese Communist Party’s approval of plans to allow all couples to have two children. “The population will begin to decline in 10 years. Why keep population planning?”
Xinhua news agency reported the new policy on Thursday at the end of a four-day party gathering in Beijing.
The relaxation is part of Chinese President Xi Jinping’s (習近平) five-year blueprint for transition to a “moderately prosperous society.”
While China’s aging population may boost consumption’s contribution to the economy, the challenge is ensuring economic dynamism does not fade as the share of young people shrinks, as it has in Japan.
The announcement spurred heated debate on the Internet.
Some microbloggers complained they cannot afford a second child, while others said they want two children because a single child is too lonely.
A user nicknamed “AVIC-Yang” calculated it will cost 1.35 million yuan (US$212,000) to raise a child until they get married. With a monthly salary of 5,000 yuan, it will take 45 years to earn enough money for two kids.
“I just cannot afford it,” the user wrote.
Bloomberg Intelligence economists Tom Orlik and Fielding Chen (陳世淵) cited three other reasons why the relaxation will have limited impact on the birth rate and economy: the lag before any new children enter the workforce, social pressures that push young people to work harder and start families later, and multiple exceptions to the existing rule.
A previous relaxation fell well short of the goal of boosting births by 2 million a year. It allowed families to have a second baby if one parent was a single child.
“The baby boom will probably not show up,” Beijing-based China Minzu Securities Co (中國民族證券) analyst Zhu Qibing (朱啟兵) said. “We need to be careful not to overestimate the short-term boost to GDP.”
China’s one-child policy, tested first in areas such as Rudong, was adopted nationwide in the late 1970s, with various exemptions for minorities.
Since then, the policy has accelerated the aging of China’s populace, removing hundreds of millions of potential babies from the demographic pool. The country’s old-age dependency ratio — a measure of those 65 or over per 100 people of working age — is set to triple to 39 by 2050.
The UN has estimated China’s crude birth rate will fall to 12.2 births per 1,000 population between this year and 2020 from 13.4 in the previous five years.
Meanwhile, the number of people aged 60 and above will increase by almost 36 million, to 245 million by 2020, according to UN projections. By 2030, the number will have surged by almost 149 million — more than the combined populations of Germany and France — to 358 million.
The policy shift may help redress an imbalance between males and females, discouraging parents from aborting females fetuses because they now have two chances for a boy.
China’s sex ratio stands at more than 106 males per 100 female births, one of the highest in the world, according to the UN.
The shift will be felt differently across urban and rural sectors, with a bigger impact in the countryside: Most rural parents did not qualify for the previous relaxation because they are typically from families with two or more children.
Urban households will continue to take “a look-and-see attitude on this policy change,” Hong Kong-based Australia & New Zealand Banking Group Ltd chief Greater China economist Liu Li-gang (劉利剛) said.
China stocks closed mixed yesterday as food and beverage shares gained on announced reforms to the country's one-child policy rule, but manufacturing lagged.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen was unchanged at 3,534.08, while the Shanghai Composite Index lost 0.1 percent, to 3,382.56 points.
One of the biggest winners was China Child Care Corp (中國兒童護理), which makes hair and skin care products for children. Its shares ended 40 percent higher on the Hong Kong stock exchange, although its small market value likely made trading more volatile.
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