August 2009

GREETINGS

Dear Readers,

While changes to China's corporate laws and regulations are of more immediate relevance to those doing business in China, changes to China's national policies on population growth are also of interest. 30 years ago China implemented the remarkably successful One Child Policy, restricting most urban families to one child. In Shanghai, for example, 97% of families have only one child. Such success has led to the problem of a rapidly aging population. The fact that Shanghai is now pushing eligible families to have a second child is an example that the policy is relaxing.

Edward Lehman
Managing Director

FEATURES

Signs China's One Child Policy relaxing

The Shanghai municipal government has issued details of a campaign encouraging eligible parents to have two children. The policy is the first designed to encourage couples to have more than one child since the One Child Policy was implemented 30 years ago in 1979.

From whatever angle is it viewed the One Child Policy has met its goals of reigning in China’s explosive population growth. It is estimated that there have been between three and four hundred million less births than there otherwise would have been. Contrary to that reported in the Western Media, public support is firmly behind the policy, with a majority of people believing it is fundamentally necessary for China to develop in an economically sustainable way.

Furthermore what many do not realize is that the policy, while generally obligatory, has many exceptions designed to ease its effect. Parents whose children have died or become disabled are entitled to have another child, likewise where parents divorce and remarry, they are entitled to have another child where their new spouse is childless. Rural citizens are entitled to have a second child where the first child is a girl. Those coming from China’s recognized minorities are allowed to have a second child if dwelling in urban areas and four children in rural areas.

In recent years all provinces and municipalities have issued regulations allowing a couple to have two children where both parents are only children themselves and also to couples where both parents hold doctorate degrees. Surprisingly though the number of couples taking advantage of these exceptions has remained low. This is what led Shanghai to begin highlighting the policy. Currently 97% of Shanghai households with young children are one child families. This will create an enormous burden on workers in the future due to the current “4-2-1” situation where there are four grandparents and two parents but only one child. It also shows the autonomy China’s provinces and municipalities have in determining family planning policy. While rural counties where families have two or more children have no problem with an aging population, cities such as Shanghai and Beijing are increasingly seeing this problem. They have the tools to tweak the policy.

Lehman, Lee & Xu
10-2 Liangmaqiao Diplomatic Compound
No.22 Dongfang East Road Chaoyang District
Beijing 100600 China
www.lehmanlaw.com