China's two-child policy delivers wrong baby boom

Goodbaby International Holdings

30/10/2015 05:42

(The author is a Reuters Breakingviews columnist. The opinions 
expressed are her own.) 
    By Robyn Mak 
    HONG KONG, Oct 30 (Reuters Breakingviews) - China's 
Communist leaders have delivered a baby boom, but not the one 
they are hoping for. Diaper and dairy stocks jumped on news that 
the state will in future permit all couples to have two 
children. Though the birth rate may inch up as a result, it 
won't have much impact on China's ageing population and 
shrinking workforce.  
    The decision to relax the one-child policy after 36 years 
will affect roughly 90 million Chinese families, according to 
the government. Investors promptly rushed to find companies 
which would benefit from an influx of infants. Shares in baby 
formula maker Beingmate  002570.SZ  rose 10 percent in Shenzhen, 
while French dairy giant Danone  DANO.PA  hit a five-month high. 
Shares in China Child Care  1259.HK , the Hong Kong group known 
for its Prince Frog baby shampoo and bath products, bounced 22 
percent. 
    Yet the excitement is premature. Rural families, ethnic 
minorities, and couples that are both only children were already 
exempt from the existing rule. And previous changes to the 
policy have produced little response. In 2013, the authorities 
allowed couples where one parent is an only child to have a 
second baby. But of the 11 million couples that were eligible, 
only 1.5 million applied, according to state media. In 
wealthier, urban Beijing, the number was just 30,000. 
    The figures underscore the scale of China's demographic 
challenge as it faces slowing economic growth and a shrinking 
labour pool. Today, over 67 percent of the population is aged 
between 15 and 59, according to data from the United Nations. 
But by 2050, that number will shrink to 50 percent, while over a 
third of the population will be over 60. 
    Convincing educated, urban women to have larger families 
will be the hardest. In Shanghai the fertility rate - the 
average number of children born to each woman - is 0.7, well 
below the national rate of 1.7. The soaring cost of living in 
cities is one big reason why an increasing number of women 
choose not to have children at all. It will be harder to 
encourage Chinese mothers than it was to prevent them from 
giving birth. 
 
 
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    CONTEXT NEWS 
    - China's ruling Communist Party said it will ease family 
planning restrictions to allow two children for all couples, in 
a statement released on Oct. 29. This relaxation of the 
decades-old one-child policy is a response to the country's 
ageing population, the party said, according to state media.  
    - Chinese authorities on Oct. 30 clarified that couples who 
qualify for having a second child will still need to secure 
approval. Details of implementing the policy, as well procedures 
to apply, will be left to each province.  
    - Shares of Hong Kong-listed baby stroller maker Goodbaby 
International rose 5.4 percent by mid-morning Hong Kong time on 
Oct. 30. Milk powder maker Yashili International as well as 
dairy company China Mengniu Dairy were up 7.7 percent and 5 
percent, respectively.  
    - China had already relaxed restrictions in 2013, when it 
allowed couples in which one parent is an only child to have a 
second baby. Ethnic minorities and rural families with a female 
first child are also exempt from the one-child policy. 
    - China's population grew 0.5 percent in 2014 to reach 1.36 
billion, according to the World Bank.  
    - Reuters: China to allow all couples two children to 
counter aging population  ID:nL3N12T46T  
      
     
    -- For previous columns by the author, Reuters customers can 
click on  MAK/  
 
 (Editing by Peter Thal Larsen and Katrina Hamlin) 
 ((robyn.mak@thomsonreuters.com)(Reuters messaging: 
robyn.mak.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA POPULATION/BREAKINGVIEWS