Wednesday, August 10, 2022

China’s three-child policy is unlikely to increase birth rates – Moody’s

The rating agency Moody’s Investors Service said on Monday (June 7) that a new Chinese policy that allows couples to have up to three children could support fertility, but it is unlikely to change the country’s birth rates dramatically.

China announced on May 31 that married couples may have up to three children in a major shift of a limit of two, after recent data showed a dramatic decline in births in the world’s most populous country.

Moody’s said the reform underscores the risk of aging in emerging markets in Asia.

“While China’s new policy that couples can give birth to up to three children can support fertility, it is unlikely to dramatically change the national birth rate, meaning aging will remain a credit-negative constraint,” Moody’s said.

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Shares in birth and fertility-related companies listed in Hong Kong and mainland China fell after the Moody statement.

The decision to admit families to three children has been met with skepticism in China, with people expressing doubts on social media as to whether it would make a big difference, asking for details on the promised “support measures” available.

China scrapped its decades-old one-child policy in 2016 and replaced it with a limit for two children to try to avoid the risks to its economy due to a rapidly aging population.

But this has not led to a sustained increase in births, given the high cost of raising children, especially in cities.

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By Kanishka Singh

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Nation World News Desk
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