Why China's child policy doesn't add up for its citizens

Haze Fan | Special to CNBC
Chinese parents not convinced about second child
Chinese parents not convinced about second child

Beijing may hope for a second-child baby boom but Chinese citizens have mixed feelings about the country's famous one-child policy being abandoned. And, if it works, the loneliness of being an only child could be the driving force.

On Thursday the ruling Communist Party announced it would relax family planning restrictions that since 1979 have prevented most families from having more than one child. This follows an easing of the policy in late 2013, when Beijing said that certain parents, such as those that were of single-child families themselves, could have two children.

Fears about China's shrinking labor pool were behind the change, which was announced as a key outcome of a high-profile party planning meeting.

Immediately after the announcement, some Chinese media ran online opinion polls. The results showed that far from all respondents were thrilled with the newfound liberty.

In's survey, of the 128,806 respondents who took part, 52,223 people, or 40.5 percent, said they would not have a second child; 30.4 percent said they would have another baby and 29.1 percent of the interviewees said the decision would depend on the economic and family situation.

In a similar poll, found that of 11,000 Chinese participants, 40.2 percent voted for having one child only, 34.4 percent chose to have a second child and 12.5 percent said they did not want children at all.

Are Chinese baby boom predictions overstated?
Are Chinese baby boom predictions overstated?

The leaning toward stopping at one child was echoed when CNBC spoke to Chinese parents.

"I will not consider having a second child at the moment," said 31-year-old Lu Fei, who works at a foreign government institution in Beijing.

"The government only said all couples can have two children, but they will not share any cost of raising a child. We will have to pay every penny of the medical fee, the huge bill of education and any expenses on raising a child. And the supplementary facilities are very insufficient," she added.

IT company manager Gong Yanming, who expects his first child to arrive in a couple of weeks, agreed.

"The financial pressure is my main concern," he said. "If we decide to have another baby, then my wife needs to quit her job and stay home with kids all the time. But we will not be able to afford a life with two children in that way. It's so expensive to raise a child in China, I would rather focus all my resources on one child."

Chen Dan, a senior account manager at PR firm Weber Shandwick and the mother of two-year-old boy, is certain she won't have another child.

"It's too expensive and too stressful. I won't have any freedom and personal time. Absolutely no."

Those who favored a second child said it was the prospect of loneliness that drove them.

Ge Chenchen, who works at Johnson & Johnson, told CNBC: "I think I will have two children, one child will be too lonely. And they can always look after each other."

And Cui Mingming, a banker, said: "I'm the only child in my family so I know how lonely it is growing up alone. I don't want my children to be like this."

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According to the latest report from the Chinese Academy of Social Science, it costs 490,000 yuan ($77,165) to raise a child from birth to 16 years old in an average city in China. Meanwhile, a Credit Suisse survey suggests the average cost of raising a child to 18 is 23,000 yuan ($3,622) a year, eating away 43 percent of the average family's annual income.

In big cities such as Beijing and Shanghai, parents have to spend as much as 2 million yuan to raise their child to university age.

On Friday, China's Family Planning Authority gave more detail on how the new policy would work: each province would be left to determine the implementation of the rules, with couples planning to have a second child still required to secure "relevant approval", although this process will be simplified. The authority expects about 90 million couples to be impacted by the change.

China faces what Euromonitor International's head of countries analysis, Media Eghbal, calls a "demographic timebomb, because of rapid ageing, before the country has reached developed economy status."

Eghbal gives a series of startling stats.

  • India will overtake China as the world's most populous country by 2025.
  • China's working-age population aged 15-64 is set to decline from 2016 with numbers shrinking by 11 million in 2015-2020 - equivalent to the population of Greece.
  • The population aged 65-plus will be the fastest growing age-group.
  • Last year China already had one of the oldest median ages in Asia Pacific at 37.3 years, which Euromonitor predicts will hit 40 years old by 2025.

"China's changing demographic profile has been a predicament as it is losing competitiveness as a source of labour within the region especially in the context of rising wages," Eghbal said.

"Other countries with younger populations and cheaper labour costs are proving to be more alluring than China who can't compete with the demographic dividends that they offer."

But Liang Zhongtang, a demographic expert with Shanghai Academy of Social Science, doubts the policy change will alter this trajectory, saying there may be a baby boost from the policy change but not a baby boom.

"Nowadays people are struggling with their work and life under lots of pressure. So they are reluctant to have a second child," he said. "When the new one-child policy was in place two years ago, there is a wide concern that it might cause population surging but it had never happened. It will be the same this time."

Read MoreChina to allow all couples two children to counter agingpopulation

Chris Wei, executive chairman for Asia at insurer Aviva, told CNBC he expected some time to pass before the policy had any impact.

"If you expect everyone in urban centers to have two kids, I think that's probably a little ambitious," he said.

Despite the muted reception the new policy received, Chinese analysts applauded it as a potential money-spinner.

Founder Securities said that the economy could expect some 160 billion yuan ($25 billion) in extra consumption every year, adding that the stagnating real estate market would benefit from the growing need for family living space. The brokerage predicted that residential property prices would rise soon in first-tier and major second-tier cities.

Huatai Securities suggested that the policy change could generate considerable growth for many stocks in the medical care, mother-baby product, toy, vehicle, and clothing manufacturing sectors.

And Disney's CEO Robert Iger was thrilled by the news, saying he would write to the Chinese leaders to thank them for bringing the world's most popular theme park more children. Disney is building a theme park in Shanghai, it's first in mainland China.