Monday, 31 May 2021

China announces three-child policy

Inflation has become a major concern amid the massive monetary and fiscal stimulus enacted by governments around the world in response to the COVID-19 pandemic.

Over the long term, however, demographic forces will play an important part in sustaining inflationary pressures.

Back in the 1990s and 2000s, China was a source of global deflationary pressure due to its large workforce becoming integrated into the global economy. That trend is now reversing as China's low birth rate leads to a shrinking workforce.

On Monday, China announced that each couple would be permitted to have up to three children. It had scrapped its one-child policy in 2016.

The latest move comes after a census showed early this month that China's population grew at its slowest rate during the last decade since the 1950s, with data showing a fertility rate of 1.3 children per woman for 2020.

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