Why China's new two-child policy won't lead to a population boom

In China, it's the end of an era, but few are complaining. On Thursday, the Communist Party announced an end to a decades-old policy that was widely unpopular - and, for the rest of the world, synonymous with the iron fist with which Beijing's Mandarins ruled. The "one-child policy", which actually refers to a system of family planning regulations enforced in the 1970s (it is far more complicated in reality than the phrase suggests, imposing varying restrictions and fines for rural and urban areas), was on Thursday abandoned after close to 40 years, with every couple in China now allowed to have two children.

The move was announced at the end of a major meeting of the party's Central Committee - its fifth plenary session since the current Central Committee took over in November 2012 under Xi Jinping. The meeting was held to approve economic and social policies for the next (13th) five-year plan period (2016-2020).

Does this mean that the next five years is going to see a population boom in China, which is soon set to lose its number one ranking (rather happily) to India? That appears highly unlikely. To begin with, it's often forgotten that the one-child policy currently applies to only around one-third of the Chinese population, after revisions in 2007 and 2013. The policy in its original incarnation dictated that urban couples in China could only have one child, while families in rural areas could have two children if their first was a girl. The first revision eased the rules for urban parents, allowing them to have a second if both were only children. The second revision took it a step further, allowing a second child for urban parents if either parent was an only child.

One reason why the party took the step on Thursday to end the policy was likely to slow down the trend of a fast-shrinking work force - following the ageing pattern of other developed Asian economies - that has concerned China's planners. The effects of an ageing workforce on China's growth, which these past two decades has been built on the backs of cheap labour from the countryside, is being increasingly debated, as well as prompting renewed emphasis on hastening the transition to a high-tech economy.

The other - and perhaps more crucial - factor is likely the increasing evidence that for most urban couples - who comprise a large segment of the population still facing the one-child limit - the desire to have two children is diminishing. In Beijing, demographers expect that despite the 2013 relaxation, the increasing number of births would peak by 2019 and then decline. In early 2014, 53,000 couples in Beijing who were eligible to have a second child following the second revision applied to do so. Demographers estimate that the new policy will increase the city's two crore population in the next five years by only 2.7 lakh, with close to 55,000 births annually until 2019, following which the number is expected to decrease.

What is clear is that China is increasingly following the pattern of developed countries where in urban populations fertility rates are declining. This is most apparent in China's most developed and urbanised city, Shanghai, where according to one recent survey, only 15 per cent of married women would choose to have a second child even if allowed to do so. Rising education costs were cited as one common factor.