The Strategist

China Revokes the One-Child Policy


10/29/2015 - 14:38



The Chinese authorities have decided to abandon the one-child policy. All families are now allowed to have two children, reports the agency "Xinhua". This decision was made during the last plenum of the Communist Party of China at Beijing.



Leaders of the Communist Party also announced their intention to take measures to combat population aging and eradicate poverty in the country by 2020. In addition, the government will give a number of state-owned assets in the management of pension funds.

It is expected that changes in the state family policy will support the economy and solve the problem of an aging population. In 2013-2014, number of people of working age in China fell by 3.7 million men.

Shares of European baby food producers Danone SA and Nestle SA immediately jumped up against this background, by 2.4% and 0.4%, respectively. These companies receive approximately 7% of revenue in the Chinese market, which is estimated at $ 19 billion. Shares of American Mead Johnson, receiving one-third of revenue in China, rose by 5.3% at e-trading in New York.

The one-child policy was a reprisal for the population explosion that occurred in China in the middle of the last century (from 1949 to 1976, the population had increased almost two-fold from 540 million to 940 million). Leadership of the PRC adopted measures to limit the birth rate in 1980, for what they subsequently have often been criticized. The policy was named the cause of millions of forced abortions and basis for creating a demographic "time bomb."

According to UN estimations, China will have nearly 440 million people over 60 years old by 2050. Statistics on the working population looks alarming against this background - a decline of 3.71 million was noticed last year, and it is expected that this trend will continue. Being aware of economic threats posed by such demographic situation in recent years, Beijing has begun to gradually weaken the one-child policy.

In recent years, only certain population stratums had the right of having more than one child. There were families from ethnic minorities, and those parents who were only children in their family. In addition, the benefits were provided to rural residents with first-born girl.

In traditional Chinese families, the birth of a boy is a matter of survival (they are the main breadwinners and do the hard work in the fields), as well as of prestige.

The government does not miss an opportunity to tell about success of this partial liberalization. According to official statistics for 2014, Chinese mothers gave birth to 470 thousand more children than a year earlier. Nevertheless, experts insist that the fertility rate is still not growing fast enough. The only solution to this problem would be abolition of the one-child policy – exactly what they did.

 




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