China Center Research Brief: Two-Child Policy Won't Produce a Baby Boom

Even if China's new two-child policy results in moderately increasing its fertility rate over the long term, it won’t alter the medium-term workforce trends irreversibly set in motion by past birth patterns, chief among them a quickly decreasing labor supply; a large bulge of low-skilled, elderly workers; and two big “baby boom” retirement waves.

This brief summarizes our thinking on China’s population and workforce trends and outlines the potential impacts on MNC business in China. The abandonment of the one-child policy will have little material effect on the Chinese economy, either in the consumption or labor market spheres, for at least another decade. However, we do see several near- to medium-term business impacts that warrant planning consideration, if birthrates surprise to the upside, including tighter labor markets and pressures for improved health care and education benefits.