China, where family planning can mean candles, 30 official stamps and 50 approval letters From Credit Suisse, do breathe in the romance: The impact of the easing of the one child policy on birth rates may be overstated based on the experience of easing restrictions on parents who are both single children in their families (as shown in Exhibit 3). Guangzhou, a southern China city, had more than 14,000 couples, who were both single children in their families, hence eligible to have the second child, but only 360 couples had the second child in 2009. It is an extremely complicated process for a couple to receive an approval for having the second child (Exhibit 4). Take the example of Nanjing, where if a couple decides to have the second child, they need to discuss the birth plan with their neighborhood organizations. It requires more than 30 official stamps and 50 approval letters, to verify the Hukou status and one child status, before the couple can be granted the right to have the second child. In the past, having a child was a decision not just made by parents but also the government. Now, the decision is made collectively by the couple, their neighbours and those controlling the approval process. If one does not have connections with the authorities ("Guanxi"), the process could take months. The economic pressure also weighs in, as costs of having a child has increased in recent years. According to a survey conducted earlier by sina.com, only about one third of respondents indicated that they prefer to have the second child in case of policy easing. In our view, those who really want to have their second child will rush to do so, but the additional births after the first batch is likely to cool off quickly, though there still will be additional babies every year as a result of the policy easing. That's referring to the coming relaxation of China's one child policy (already pretty loose if you have the cash, we note) which is expected to kick off in the first quarter of 2014 when parents (at least one of whom is the single child in their family) will be allowed to have a second child. There's obviously lots we don't know here. Is there is a fast track in cases of a fait accompli? Will the Chinese government decide treating family planning like the application for a J visa isn't the best way to go? But what we do/ still know is that it's wise to treat estimates of extra children as the one child policy is further relaxed with caution. Fwiw, Credit Suisse expect: Over 2014-2020, we estimate a total of 8.3 million additional children born due to the relaxation of the policy on top of 108 million children without the easing of the policy. By 2030, we project 19.5 million additional children. Our projection is slightly more conservative compared to the estimates by other research teams in Financial Services. That is because (1) gaining the approval letter for the second child may prove to be a complicated and torturing process; (2) some couples otherwise willing to have their second child have already been sterilized and therefore can never have children in the future; (3) some are intimidated by the economic costs of raising children, housing and educational costs in particular. Number (3), pleasingly normal in context, is also a boon for the economy, driving consumption without the government spending a penny - finger in air math puts it at a cumulative RMB2.3tn or so of extra expenditure by 2020. But it seems churlish to mention that so soon after noting the number of stamps (or their equivalent) needed to even get the ball rolling and even more so when you put China's problem into a wider perspective - the IMF guessed a relaxation of the one child policy would see China achieve a replacement rate of 2.1. Not precisely impressive, even if the moment when China becomes a net labour shortage country is being pushed back. There's always immigration, we suppose. Related links: Banks vs babies - FT Alphaville Apparently if you want more babies you just have to let people have them - FT Alphaville China's yuan-child policy - FT Alphaville