Concrete Analysis | Is 2-child policy another stimulus to China’s property market?

Since the introduction of the 1-child policy from late 1970s, China’s new birth rate has remained low. According to the《Population and Social Development Report 2014》issued by National Development and Reform Commission on 31st July 2015, China’s new birth rate has dropped from 2.33 per cent to 1.21 per cent in the last 27 years which is one of the lowest in Asia and even lower than USA’s 1.3 per cent.

On the other hand, China has entered into an “ageing society”. According to Government’s Statistics Bureau, there were 202 million people over 60 years old in 2013 (i.e. 14.9 per cent of total population) and the figure further climbed to 212 million in 2014 (i.e. 15.5 per cent). The ageing situation is worsening and is alarming.

As a result of low birth rate and high ageing population, China’s labour force is shrinking at a rapid rate. During the last 3 years from 2012 to 2014, the total number of the labour force (i.e. males from 16-60 years old, and female from 16-55 years old) has dropped by 9.6 million people.

Family planning is a long term issue, and it will take time for benefits to emerge though subject government supports.

China has introduced a pilot policy in 2013 by allowing couples from a single child family to have a second child. The National Health and Family Planning Commission has once estimated that the 11 million eligible couples will be giving birth to some 1 to 2 million babies every year but actual figures show otherwise.

The low response rate for the pilot policy demonstrates that the Government will have to offer more supports to its people such as medical care, education, public facilities and mostly importantly “hukou” (official residence status) before the policy shall become effective.