China to leave implementation of two-child policy to provinces (updated)

Goodbaby International Holdings

30/10/2015 08:45

(Adds investment bank comments, paragraphs 11-14) 
    By Megha Rajagopalan and Ben Blanchard 
    BEIJING, Oct 30 (Reuters) - China's top family planning 
authority said on Friday the central government will leave 
provinces to hash out the details of implementing a new policy 
allowing couples to have two children. 
    About 90 million families may qualify for the new two-child 
policy, which would help raise the population to an estimated 
1.45 billion by 2030, the National Health and Family Planning 
Commission said in an online statement. China, the world's most 
populous nation, had 1.37 billion people at the end of last 
year.  
    The policy, initially announced on Thursday by the ruling 
Communist Party, represented a further relaxation of the 
long-standing and controversial "one-child policy". Beijing 
hopes it can help offset the burden of an aging population. 
 ID:nL3N12T46T  
    For decades, China harshly implemented the one-child policy, 
leading to forced abortions and infanticides across the country. 
In recent years, however, the policy has been relaxed, and some 
couples are allowed to have a second child. Others are permitted 
a second child if they pay a fine. 
    Despite Thursday's relaxation of the policy, the government 
will remain heavily involved. Families wishing to have a second 
child would still need approval, although eventually the 
commission will seek to shift to a system of registration rather 
than approval, deputy director Wang Peian said in the statement. 
    Critics say the policy change comes too late and will not 
have the desired effect. By around the middle of this century, 
one in every three Chinese is forecast to be over 60, with a 
shrinking proportion of working adults to support them. 
    Wang said the commission expected a labour force aged 
between 15-59 years to rise by about 30 million by 2050, 
stabilising expectations for economic growth. 
    After taking power in 1949, the Communist government 
promoted big families but in the late 1970s it introduced the 
"one-child policy" as a way to keep the population from 
spiraling out of control. 
    China's birth rate stands at about 1.6 children per family, 
according to Lu Jiehua, a professor in Department of Sociology, 
Institute of Sociology and Anthropology in Peking University. 
    "If this figure doesn't rise significantly after five years, 
I think the government will take further steps to cut 
restrictions on births. Ideally the rate should be 2.1, which 
can boost the economy and social development best," said Lu. 
     
    BUSINESS OPPORTUNITIES 
    With a modest rise in the fertility rate to 1.74, Zhou Hao, 
senior Asia emerging markets economist at Commerzbank AG, said 
the ratio of people over 65 years old to those aged 15-64 would 
climb to 43 percent by 2050 from 13 percent this year. 
    "In fact, under any projection, China's old-age dependency 
ratio will pick up sharply, which means that the relaxation of 
population policy will only smooth the slope of old-age 
dependency ratio over time," he wrote in a note. 
    Still, Credit Suisse saw business opportunities in any 
increase in births. The policy relaxation would result in three 
million to six million additional babies per year, or a boost of 
17-33 percent from the current 16.5 million newborns per year, 
it said in a separate note. 
    Assuming the cost of raising a child to be about 40,000 yuan 
a year, the additional consumption would amount to 120 billion 
to 240 billion yuan a year from the end of 2017, or 4-6 percent 
of total retail sales, it estimated. 
    Investors were quick to trade on the news, pushing up shares 
of toy makers and other childcare-related stocks in Shanghai and 
Hong Kong. 
    Shares of baby stroller maker Goodbaby International 
Holdings Ltd  1086.HK  and diaper maker Hengan International 
 1044.HK  rose more than 5 percent and 2 percent respectively. 
Instant formula makers also gained, with Beingmate Baby & Child 
Food Co  002570.SZ  rising by the daily limit of 10 percent. 
    Beijing loosened the family planning policy in late 2013, 
allowing couples to have a second child where one partner was an 
only child, but as of June, only 1.5 million of the 11 million 
eligible couples applied to expand their family, said the paper. 
    Yuan Xin, a scientist at Nankai University in Tianjin, was 
quoted by the China Daily newspaper as saying the latest change 
will have a greater impact on rural families who are more 
interested than city dwellers in having larger families. 
 
 (Additional reporting by Engen Tham, Nathaniel Taplin, Adam 
Jourdan and Pete Sweeney in Shanghai; Writing by John Ruwitch; 
Editing by Raju Gopalakrishnan) 
 ((engen.tham@thomsonreuters.com; +86-21-6104-1769; Reuters 
Messaging: engen.tham.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA POPULATION/