BIG IDEA | ‘A lot of people feel like the ideal, the optimum number of children is a maximum of two children. So it's not a surprise to me that the three-child policy hasn’t had a high response in the short term. But I think in the long term it will be much better.’

Fund Manager 1: ‘China’s fertility rate is 1.7, and it's been plateauing and now for the last 23 years, remaining more or less constant.’

• ‘That doesn't look so dramatic to me. When I look at the birthrate per woman in many other countries, like Korea, Japan, most of the EU countries, it's much lower than that.’
• ‘So is Chinese birthrate and usually low or not?’

Shang-Jin Wei: ‘I think the answer is yes.’

• ‘A country birthrate is a function of both income level and other policies.’
• ‘Generally speaking, as a country becomes richer, you see a decline birth rate.’
• ‘So when you benchmark the Chinese birthrate to other countries at a comparable income level, it does look very low.’
• ‘And China ever approaches to French or Japanese income levels, you will have much, much lower birthrate if you don't do anything else.’

‘The Chinese leadership now is extremely nervous about the birthrate.’  

• ‘They have not only the three-child policy, but there are stories about various local governments trying to put in pressure party members to take the lead and produce more children.’
• ‘It’s ironic – first the government was heavy-handed on the side of getting birth rate down, and now it’s heavy-handed on the side of getting birth rate up.’

Fund Manager 1: ‘My subsequent question is this:’

• ‘Now you have the two-child policy and the three-child policy, but you could have the ten-child policy – but it's about the willingness to have kids or for Chinese women.’
• ‘And do you expect any pick just based on the fact that there is a policy that says have children?’

Shang-Jin Wei: Should we expect to see a strong response or not?’

• ‘Data so far suggests that we don't see the very strong birthrate response the policymakers ’

‘Globally, we know people don't want to have children.’

• ‘Raising children is so expensive.’
• ‘Plus survival rates are so good.’
• ‘Therefore, the argument goes, we should not expect to see a rebound of the birth rate.’

‘I have somewhat different views. My guess is that the Chinese response rate a few years down the road will be stronger than right now for the following reason:’

• ‘Decades of a family planning policy, the so-called “one-child policy” have trained young Chinese and their parents to convince themselves that the optimum number of children is one, or at most two if you are in wealthy places.’
• ‘Therefore, now you go and reverse the process, "Please go ahead and  have three children." ’
• ‘If you already convinced yourself, the optimum number of children is one or two, why would you want to go to three?’

‘But as the Chinese people get wealthier, travel around the world and see families with several kids, this could change – the next generation could want to have several children.’

• ‘Not everyone is going to want to have three children.’

‘But China’s birthrate converging toward the global norm is something that we should not rule out.’

• ‘Therefore, the medium-term response could be higher than what we're seeing today.’

Fund Manager 2: ‘As a person who was born and grew up in China – and who is the only child in my family - I agree with all that Shang-Jin has said.’

• ‘My friends in China - everybody - is talking about three-child policy.
• ‘I can really feel that while it's a big topic now, it's not something people can accept in the short-term because people in China are so used to the one-child policy or having two children.’

‘A lot of people feel like the ideal, the optimum number of children is a maximum of two children.’

• ‘So it's not surprising to me that the three-child policy hasn’t had a high response in the short term.’