China has announced that it will allow couples to have up to three children, after census data showed a steep decline in birth rates.

BBC News, May 31, 2021

The why

When China dropped its one child policy five years ago it anticipated allowing couples to have two children would smooth out the ‘demographic bulge’ of a large aging population being supported by fewer in following generations. China’s latest census shows its birth rate has continued to fall (ongoing since 1990) and this ‘major’ policy shift is not expected to reverse that trend.

The why (not)

Kids are costly – but for urban Chinese couples housing and education is more expensive compared to their peers in the US, Japan, Australia. Moreover Chinese couples born in the 1980’s and 90’s (the one child era) are acutely aware of being squeezed on both flanks of family life: they call it the 2:4:3:9 ‘responsibility ratio’ – the couple will have to support 4 aging parents whilst raising 3 kids who might bear 9 (who the couple as grandparents will be expected to care for whilst their own children go out to work).

Not just a China story

The kid ‘for the country’ has created a stir because China’s policy signals have international reverberations. China is both a vast labour market, producing goods and is a marketplace on which the rest of the world relies. In 2018 China was the world’s largest trader accounting for 12.4 % of global trade, ahead of the US (11.5%)  and then Germany (7.7%). Changes in the domestic settings will affect many other nations’ import and export strategies.

Subverting
Stable
Accelerating

This update is part of our Megatrends Watch series, which tracks developments that inform our six global megatrends….

Image: Javier Quiroga

What are megatrends and how they are shaping the future of business?

Impactful Technology
Demographic change
Rapid urbanisation
Amplified individuals
Economic power shift
Climate and resource security

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