In this April 5, 2010 file hoto, Chinese grandparents and grandchildren play in a park in Dafeng, in east China鈥檚 Jiangsu province. China鈥檚 ruling Communist Party announced Thursday, Oct. 29, 2015, that it will abolish the country鈥檚 decades-old one-child policy and allow all couples to have two children, removing remaining restrictions that limited many urban couples to only one, the official Xinhua 黑料社 Agency said. AP FILE PHOTO
BEIJING鈥斅燙hina鈥檚聽decision to abolish its one-child policy is a boon to couples and to sellers of goods from formula to diapers to toys. And it might help defuse economic stresses caused by an aging population.
The impact of the surprise change announced Thursday is expected to be gradual. But with incomes rising in the world鈥檚 most populous country, even a small uptick in births could translate into higher demand from Chinese that could ripple around the world.
READ: China ends one-child policy, says state media |
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.
Wei Guang, the father of an 8-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 can cost 100,000 yuan ($16,000) a year.
鈥淲e know the cost will be substantial,鈥� said Wei, 51, who works in media and whose wife is in her 30s. 鈥淏ut we can manage.鈥�
Citigroup researchers said they expect a 5 percent to 10 percent 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聽China鈥檚聽average age to soar, prompting concern about whether a shrinking workforce could support a growing pool of retirees.
China聽already had one of Asia鈥檚 highest median ages at 37.3 years in 2014, and that could rise to 40 by 2025, according to Media Eghbal of Euromonitor International, a research firm.
The size of聽China鈥檚聽working-age population ages 15 to 64 is set to decline starting next year, according to Eghbal. Euromonitor estimates that the workforce will shrink by 11 million people in 2015-20.
The latest change 鈥渋s significant and likely a response to the pressures that have been building,鈥� said Eghbal.
Experts say it will take two decades for babies born under the relaxed policy to have a significant effect on the workforce. But an increase in births could begin providing a boost to the economy as soon as mid-2016.
鈥淗aving the birth rate go up will definitely stimulate the economy,鈥� said Seth Kaplowitz, a lecturer in finance at San Diego State University who worked in聽China鈥檚聽real estate industry in the late 2000s.
Kaplowitz predicted that an increase in babies will eventually provide a 鈥渨hole new base of opportunity鈥� for U.S. 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 Mead Johnson Nutrition Co., which makes Enfamil and other baby formula, rose more than 3 percent. The company, based in Glenview, Illinois, derived more than half its revenue between July and September from Asia.
鈥淐hina聽is an important market for us, and we will be carefully monitoring this latest policy adjustment,鈥� said Chris Perille, a company spokesman.
Jeremy Haft, an entrepreneur who does business in聽China, said the one-child policy damaged the country demographically but faster population growth brought on by the end of the policy is a business opportunity worth trillions of dollars over time.
鈥淎ll these people will need to be fed, clothed, housed, healed, powered, transported, and networked,鈥� he 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 鈥渓ittle emperors,鈥� paying for dance, music and English classes.
Su Weihua, the mother of an 8-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.
鈥淚 think we may spend less on things like traveling, luxury goods, expensive new phones or a bigger house,鈥� said Su, 36.
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