Date
18 October 2017
CHINA ONE CHILD

The Big Picture: TWO-CHILD POLICY

In a major social reform, China has decided to relax its decades-old one-child policy and allow couples to have two children if one of the parents is an only child. The shift in the family planning policy was among a raft of social and economic reforms that were approved by top Communist Party leaders at their recent plenum, state media reported on Friday.

The easing of the one-child policy is aimed at promoting long-term balanced development of the country’s population, the official Xinhua news agency said, citing a decision made by the Communist Party of China’s Central Committee after a four-day plenary session that concluded on Nov. 12. It is probably the most significant measure among all the other reforms unveiled by the party after the plenum, as it ends a curb that has been in place for more than three decades.

The one-child policy had been imposed in 1979 as China’s leaders tried to suppress population growth to bring down food consumption and lessen the social security burden. But authorities have now realized that they need to shift to an easier regime as the world’s second-largest economy is faced with the problem of an aging population, which will lead to higher healthcare costs, declining productivity and slower domestic consumption.

Guo Zhenwei {郭震威}, a family-planning official with the National Health and Family Planning Commission, was quoted in a Xinhua report on Saturday that easing the policy will keep China’s birth rate at a stable level. The population should be kept at about 1.5 billion to ensure coordinated economic and social development, Guo said, adding that the country should keep its total fertility rate at around 1.8, up from about 1.5 and 1.6.

The reform is good news for some consumption-related industries. In fact, shares of milk suppliers and children’s product makers already reacted positively on Friday amid rumors of the impending shift to the two-child policy. Companies like Goodbaby International Holdings Ltd. (01086.HK), Hengan International Group Co. Ltd. (01044.HK), Yashili International Holdings Ltd. (01230.HK), China Modern Dairy Holdings Ltd. (01117.HK) and China Mengniu Dairy Co. Ltd (02319.HK) are likely to increased investor interest on hopes of increased sales for those firms.

Although the two-child policy is obviously a good move, there is concern that nowadays people in the urban areas may not want more children due to the high living costs in the cities, observers said. Young people are struggling to find jobs and make ends meet. They also cannot enjoy a comfortable living environment due to the high property prices. Such problem, which has been seen in developed countries over the last few decades, is now a common phenomenon in China.

China said to eye Temasek-style state investment vehicles

China will support some qualified state-owned enterprises to set up state investment companies on the lines of Singapore’s Temasek Holdings, in a move aimed at boosting yields of state funds, the National Business Daily reported Monday, citing unnamed sources. The scheme was incorporated in the reform plans unveiled after the third plenum of the Communist Party’s 18th Central Committee, the paper said. 

Govt expected to step up taxation reform

China is expected to accelerate the reform of taxation system following a decision by the Communist Party’s Central Committee to improve the system, the Chinese Securities Journal reported Monday, citing an analyst. Railways, postal, telecommunication and financial services sectors may be included under the trial scheme to replace business tax with valued-added tax soon, the report said. The government may also step up legislation on property tax and expand the pilot scheme next year.  

–Contact HKEJ at [email protected]

JP/AC/RC

First posted: 08.35

 

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