BLACK CHINA BLOG

1
November

One child policy gone, but no surprise

By: Kathy Liu | Comments: 0 | Category: China Economy

China’s Communist Party completed its fifth plenary session in Beijing last week. Although the detailed 13th five-year plan has not yet come out, some hot topics already caught media attention.

The big news is the end of the decades’ long one child policy. It doesn’t mean the family planning policy is over, it only means every family in China can have two kids after the policy is enacted.   We go from a one child policy to a two child policy.

Subscribers to AZ China’s World Aluminium Monthly won’t be surprised by this announcement.   Here is what we wrote in the July 2015 edition:

…the rules regarding a 2nd child will perhaps be loosened on a national basis. It helps optimize the demographic structure and create real demand. Families having a 2nd child need to spend more money on rearing their kids, buying bigger houses, bigger cars, and children’s education, etc.

Dropping the one child policy is probably more about the longer-term economic stimulus than about the social or family implications.    China is a major importer of grains and meat, and is also short of fresh water.   But as we said in July, second children mean extra spending.   This action fits within the overall strategy of getting consumers to open their wallets more.

Another hot topic from last week’s meeting is that the Communist Party leaders want the China economy to keep “medium speed” during the 13th five-year plan. What is meant by the “medium” speed is not very clear, but we think it’s another way to say reduce tension and worry as the GDP slips under 7%. The rational expectation for GDP during 2016-2020 probably around 5-6%.

Also, the 13th five-year plan will have the most strict environmental protection regulations. The policing of environmental policies have always been an issue, and the Party now asks to have vertical management of supervision of law enforcement for environmental protection. Vertical monitoring will give more power to the Ministry of Environmental Protection (MEP), and avoid local government intervention.

It is still not clear how the new laws regarding “unqualified” petroleum coke will roll out.   When it comes to allocating budgets within provincial level MEP agencies, monitoring of petroleum coke is probably not as high a priority as monitoring coal or automobile emissions.   But small calcining companies or anode manufacturers are probably considered as “low hanging fruit”, and with more focus on the policing of the regulations, agencies will be keen to score some easy wins.

We will update you once we get more information.

PS – nobody in AZ China is contemplating having a second child as a result of the change in the one child policy.

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