Spending on new babies good news for economy

2015-10-31 01:48:26 GMT2015-10-31 09:48:26(Beijing Time)  Shanghai Daily
Two brothers are pushed in a pram in Beijing yesterday. China on Thursday announced the end of its one-child policy as it seeks to rebalance its aging population and shrinking workforce. — AFPTwo brothers are pushed in a pram in Beijing yesterday. China on Thursday announced the end of its one-child policy as it seeks to rebalance its aging population and shrinking workforce. — AFP

THE central government will leave provincial authorities to hash out the details of implementing a new policy allowing couples to have two children, the country’s top family planning authority said yesterday.

About 90 million families are likely to 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, which is the world’s most populous nation, had 1.37 billion people at the end of last year.

The policy, announced on Thursday by the Chinese Communist Party Central Committee, represents a further relaxation of the decades-long “one-child policy.”

The government hopes it can help to offset the burden of an aging population.

Wang Pei’an, deputy director of the family planning commission, said demographic problems, an aging society and the pressure of elderly relatives on a single child had influenced the Party’s decision.

The official, however, said that: “family planning will remain a basic state policy for the long term,” as China still has a large population, which puts strain on economic and social development, and the environment.

Despite the policy changes, the government will remain heavily involved in family planning, and couples seeking to have a second child will still need approval, Wang was quoted as saying in the statement.

Over time, however, authorities will seek to shift to a system of registration rather than approval, he said.

The policy changes will also help to boost the country’s labor force — defined as people aged between 15 and 59 — by about 30 million by 2050, which will support the government’s economic growth expectations, he said.

According to Lu Jiehua, a sociology professor with the Institute of Sociology and Anthropology at Peking University, China’s current birth rate stands at about 1.6 children per family.

“If this figure doesn’t rise significantly after five years, I think the government will take further steps to cut restrictions on births,” he said.

“Ideally, the rate should be 2.1, which would be the best way to boost the economy and aid social development,” the academic said.

Zhou Hao, senior economist for emerging Asian markets at Commerzbank AG, said the government’s move might be too little, and too late.

“With only a modest rise in the fertility rate to 1.74, the ratio of people over 65 to those aged 15 to 64 would climb to 43 percent by 2050, from 13 percent this year,” he wrote in a note.

“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 said.

Credit Suisse, meanwhile, said it sees business opportunities in any increase in births. The policy relaxation would result in 3 million to 6 million extra babies a year, or a boost of 17 to 33 percent from the current figure, it said in a note.

Assuming the cost of raising a child to be about 40,000 yuan (US$6,300) a year, the additional annual consumption would be 120 billion to 240 billion yuan from the end of 2017, or 4 to 6 percent of retail sales, it said.

Not everyone thinks in such terms, however.

“People are thinking: Why increase our burden by having another baby?” said Wu Tingting, the mother of a 12-month-old girl in Zhuhai, south China’s Guangdong Province.

“The economy is uncertain, so that’s another thing we have to consider,” she said.

In late 2013, Beijing loosened its family planning policy to allow couples to have a second child if either partner was an only child. However, as of June, just 1.5 million of the 11 million eligible couples had applied to expand their families, Xinhua news agency reported.

“The cost of raising a kid is too high (in the cities),” said a man named Chen, the father of a 3-year-old from Xiamen, southeast China’s Fujian Province.

“Parents in rural areas might not care, but for me I want to take very good care of my child. You need to pay for their school fees and later university, and if it’s a boy you need to buy him a home, if it’s a girl you need to buy her dowry,” he said.

Others were more enthusiastic about the rule change.

Frank Zhang, a government official, said he and his wife have longed for a second child for their 2-year-old son to grow up with, but his job made it all but impossible to circumvent China’s official policy.

He said he even considered quitting to enter the private sector, where violations of family planning rules are more common and no longer carry much stigma. Now he won’t have to.

“This is great news for me,” Zhang said.

Social media users, meanwhile, met Thursday’s announcement with a collective shrug. The topic was in eighth place among trending topics on the microblog site Weibo, well behind entertainment news.

The site’s users were far more interested in reading about celebrity actress Angelababy, who held the number one spot, than making their own.

Online apathy aside, a potential upside of the policy change, according to some experts, is that it might help to correct the male-female gender imbalance in China, where there is a huge bias for sons.

There are 115 boys born for every 100 girls in China compared with 105 boys per every 100 girls in the United Kingdom, according to official figures.

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