Two-child policy to balance demographics

The decision of the just concluded Fifth Plenum of the 18th Communist Party of China Central Committee to allow all couples to have two children is a historic move aimed at tackling the challenge of the fast aging population that will have a far-reaching impact on Chinese society.

The change in the family planning policy, irrespective of the controversy over its timing, will in the long run boost economic growth. The two-child policy will, first of all, largely neutralize the problems of China's demographic structure. Over the past three decades, the country's demographic dividend, or a population structure with abundant labor force and a small population of aged people and children, had been an important factor that facilitated the economic miracle.

The percentage of China's working-age population started to fall in 2010, while the dependency ratio, or the ratio of non-working-age population to the working-age population, began rising in 2011.