Monday, 23 November 2015 11:53

The economic rationale of abolishing the one-child policy in China.

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Staying in Nanjing/China for a few weeks I have learnt that the government is about to abolish the one-child policy. I did not read about the reasons that have caused the government to encourage families to have one more child. The news on CCTV, the English Televison Channel of the Government, and in China Daily, the English language newspaper for foreigners residing in China or visiting, made me curious.

One immediate response came from the Disney Corporation in Los Angeles. They welcomed the decision enthusiastically, stating that this would boost their business in China. If only every second middle-class family in China would visit a Disney park, and market research confirms such an assumption, the profits of the Corporation would further soar. The Disney park in Shanghai, which is under construction, is expected to attract 300 million visitors. The cost for the park will be $3.7 billion. Disney’s local partner — the state-owned Shanghai Shendi Group - will own 57 percent of the resort, when it is finished in 2016.

The other reaction came from the Chinese automobile corporations. They had suffered recently from declining automobile sales. They are optimistic that the new policy will boost sales of SUVs in China, anticipating that families will wish to have more space in the car for the second child. Indeed, figures from October 2015 already confirm the hope. Sales in this month have risen by more than 10%.

Further news about the continuing boom of land sales and the property maket in Beijing add to my suspicion that the new policy has been launched for mere economic, not social, reasons. However, the relaxation of the one-child policy, has not been met with much enthusiam among young Chinese middle class couples. They are concerned that the immense work load they are already experiencing will not allow them to have time to take care of two children. Gender equality in child care is not an accepted division of labour in China. Moreover, salaries will not cover the additional costs for schooling and raising a second child, and grandmothers, who have to take care of one prince or princess may refuse to do that for two.

In the end the new policy will not boost consumer spending to the extent that the policy makers are expecting. People are more rational than economists. The implications for city planning are not yet researched…………

Read 626 times Last modified on Monday, 23 November 2015 12:20

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