China eases birth policy further, allows families to have three children

• Married couples in China are now allowed to have up to three children, according to the Communist Party's Politburo, as the nation looks to mitigate risks to its long-term economic prospects. The policy change will come with "supportive measures, which will be conducive to improving our country's population structure, fulfilling the country's strategy of actively coping with an ageing population and maintaining the advantage, endowment of human resources", per the state-run Xinhua News Agency. The government is also set to gradually raise the national retirement age, but did not provide further details.
• Bigger picture: Data published several weeks ago showed China's population growth expanding at its slowest pace since the 1950s, with the numbers on mainland China increasing 5.38% to 1.41B. The working age population - people aged 15 to 59 - was on the decline as well, after hitting a 2011 peak of 925M, while the fertility rate was only 1.3 children per woman during 2020, missing a target of 1.8 that Beijing had set in 2016 (after replacing its one-child policy). China's statistics agency even took an unusual step by announcing that the population did grow in 2020, but gave no total, prompting some to speculate it was an effort to pacify investors and corporations.
• Race against time: At issue is whether the world's second-largest economy may already be in irreversible population decline before accumulating the household wealth of G7 nations. While China has eased birth limits, couples have been put off by the high cost of living (especially in cities), cramped housing (many share apartments with their parents) and career choices (job discrimination faced by mothers). Childcare is also expensive, maternity leave is short and most single mothers are excluded from medical insurance or social welfare payments.
• Consumer companies seen potentially gaining from less restrictive family planning policies include Hasbro (NASDAQ:HAS), Mattel (NASDAQ:MAT), Danone (OTCQX:DANOY), Nestle (OTCPK:NSRGY), Procter & Gamble (NYSE:PG), Kimberly-Clark (NYSE:KMB) and Reckitt Benckiser (OTCPK:RBGLY). Asian companies such as kid-focused Goodbaby International (OTC:GBBYF), Japanese baby bottle producer Pigeon Corp. (OTCPK:PIGEF) and diaper maker Unicharm (OTCPK:UNCHF) may also benefit. Disney (NYSE:DIS) is also getting some attention, while carmakers that sell to the Chinese market may get a boost: SAIC-GM (NYSE:GM), Volkswagen (OTCPK:VWAGY), Geely (OTCPK:GELYF), Li Auto (NASDAQ:LI), Nio (NYSE:NIO), XPeng (NYSE:XPEV) , Guangzhou Automobile (OTCPK:GNZUY), BYD Company (OTCPK:BYDDF), Great Wall Motor (OTCPK:GWLLF) and Brilliance China Automotive (OTCPK:BCAUF). Add your own ideas in the comments section below.
• Thought bubble: Japan, Germany and other rich countries face similar challenges of supporting aging populations with fewer workers, but services play an important part in their economies and they have spent decades of investment on factories, technology and foreign assets. On the other hand, China is a middle-income economy that is highly based on manufacturing and labor-intensive farming. While the ruling Communist Party has proposed a series of economic reforms, it's not yet clear if they will be large enough to ease strains on the nation's underfunded retirement system.
• What about the U.S.? Births in 2020 fell for the sixth consecutive year to the lowest levels since 1979, according to data from the CDC, and the figures probably have little to do with the pandemic (most babies were conceived beforehand). Total fertility rates and general fertility rates have also declined by 4% since 2019, notching record lows. "The United States is presently moving below replacement fertility levels, which is not good for the economy," said Adina Batnitzky, a sociology professor at University of San Diego. "We will eventually have fewer working adults caring for the elderly, which further challenges our Social Security system," added Pamela Smock, a demographer for the University of Michigan-Ann Arbor.