This is an interesting read
On behalf of Dr. Jianguang Shen:
A belated farewell to China’s “one-child policy”
On 28 October, the fifth plenum session of the CCP Central Committee (CCPCC) announced a change to China’s “one-child policy”, whereby all Chinese couples will soon be allowed to have two children following revisions to the relevant laws and regulations.
- This policy change will directly benefit an estimated 80-90m Chinese couples,
8-9x more than the “selective two child” policy introduced last year. As the actual fertility rate may be significantly lower than the official statistics suggest, we believe that a dramatic change in policy is needed to address the country’s serious demographic challenges. This new policy is one such move. It is, however, long overdue and, in our view, should have been implemented much earlier. We believe the new policy is a good example of President Xi Jinping’s bold governing style.
- While this policy change should have a positive impact on population growth, consumption, housing demand, etc, we do not believe it will transform the long-term ageing demographic trend. Pilot two-child policy programs in China, the experience in other countries and economic theory all suggest that the Chinese will choose to have fewer children as their income levels rise, even without family planning.
- Based on more practical data, demographic scholars estimate that this new policy will raise the number of births in China by 3-6m each year over the next 4-5 years. Given there were 16.9m births in 2014, this represents a significant increase. Scholars also estimate that China’s population will peak in the early to mid-2020s at slightly over 1.4b.
We believe the 13th FYP blueprint is a manifesto for President Xi’s vision of economic policy; a document guiding China’s economic development over the next five years or more. In our view, the key principles behind his economic policy include maintaining medium- to high-speed growth, playing a more prominent role in international affairs, focusing more on innovation, equitable income distribution and environmental sustainability. The principles will need to stand up against challenges – both external and domestic – in the coming years, including the rebalancing of China-US relations and resistance to China’s SOE reform.
Mizuho Securities Asia Limited