China's new birth policy could boost these stocks

A customer shops for baby milk in a supermarket in Haikou, China.
STR | AFP | Getty Images
A customer shops for baby milk in a supermarket in Haikou, China.

China's Shanghai composite fell more than 40 percent from June to August, fueling worry that the government may have run out of ways to keep the world's second-largest economy chugging along at a strong pace.

The government responded by curbing short sales, lowering interest rates and strong-arming investors into putting money back into the market.

But it may have unveiled the biggest game changer Thursday, without even knowing it.

The Chinese Communist Party said it will allow couples to have two children instead of the one-child policy introduced in 1979. The government relaxed the policy two years ago in certain instances if one spouse was an only child, but Thursday's announcement expands it to all couples.

Despite possibly boosting long-term economic growth by reversing some very problematic demographic trends, the move will be a boon specifically to companies that sell baby products in the country.

Here are the stocks with the most to gain from the coming baby boom...

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