One of China’s totemic social policies is about to be abandoned.
The “one child policy” which, as the name suggests, limits each couple to one child, is going to be dropped.
According to Xinhua News Agency, the Chinese communist party’s central committee has scrapped the stricture. Couples will now be able to have two children.
The rule was brought in back in 1978, and fully implemented in 1980, to tackle the country’s perceived overpopulation.
There have always been some exemptions to the rule, and it has been relaxed in recent years, but not totally abandoned.
Back in August 2013, China’s Family Planning Commission began studying proposals to lift the ban if either parent was an only child, according to Ambrose Evans Pritchard, with rumours that the ban could be lifted on all families, as it has been now.
There’s a one-word answer to why they’re now lifting the rule: Demographics.
The country now has a particularly poor dependency for an emerging market, with a large ageing population heading towards retirement, and not as many workers coming into the labour force.
From this year, the ratio of workers for each person either too young or too old to work (known as the dependency ratio) will begin to decline, limiting Chinese economic growth.
Here’s how that ratio looks:
The lifting of the one-child policy could actually make the dependency ratio worse for some time, ironically, because it takes a long time for those new children to be old enough to work.
Before the reforms came in, during the Mao era, Chinese families were encouraged to have several children, in an attempt to boost China’s industrialisation and fill the ranks of the country’s military. In fact, as recently as the mid-1960s, the number of live births per woman hit nearly 6, an incredibly high fertility rate.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.