Just hours after China announced the end of its one-child policy, related stocks surged in Hong Kong.
On Friday, companies that make milk powder, children’s trolleys, baby clothes, children’s healthcare products, etc. opened with a bang.
That’s no surprise.
The move is meant to shore up a shrinking workforce — and ultimately bolster the economy — after a 30-year ban on families having more than one child.
Socially, it is a breath of fresh air. Now Chinese families can grow and a new generation of larger households will emerge.
This is a game changer.
China has had three decades of crackling growth — in the range of 8 to 15 percent — while keeping its population from exploding.
In the past five years, however, growth has slowed and officials have come to accept the new normal — 6-7 percent growth in the next five years
But more babies added to its heaving masses of 1.3 billion people are expected to bring hope, not doom.
The relaxed policy, which allows all couples to have two children, fulfills the dream of Chinese families to grow and prosper.
It changes the social dynamic and influences future government policy.
But for impact, few can compare with the prospect of seeing a surge of new arrivals and what it means for Hong Kong.
About eight million babies are expected to arrive in the first year of the policy relaxation alone, according to Chinese media.
Raising and educating each of them will cost 2.5 million yuan (US$394,000) before they can get a job.
That works out to 7.5 trillion yuan in extra impetus to the Chinese economy. Hong Kong can grab a fair share of the windfall.
Baby formula maker Mead Johnson and others might tell you Chinese fertility rates have not substantially improved.
But the understatement could be meant to hide exactly how much they have been making.
Same thing with schools and other learning institutions.
Just look at how many international schools such as Mapleleaf Education have been charging debentures and tapping the stock market and you get the picture.
More babies in China will benefit kindergartens, dance schools even tuition schools in Hong Kong, where the highest-earning teacher makes close to HK$80 million a year.
But there is more. More babies means more toys, more baby food, more baby transport — you name it.
These are all basic necessities and don’t include things that no pampering parent would not buy for the baby.
And when the babies grow older, they will need entertainment and bigger living space (former financial secretary Antony Leung recently said Hong Kong will develop into a global metropolitan with a population of over 10 million).
Property developers would start building bigger homes and banks and insurance companies would create new products for the new generation.
Even family lawyers could be in demand because two children make the case for an orderly inheritance and estate planning.
Welcome to baby boom 2.0.
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