Moody’s for China: Three-child policy not expected to change birth rate dramatically

China’s new policy that allows couples to have up to three children Moody’s Investors Service comments that it could support fertility but described it as “unlikely” to dramatically change the birth rate in the country.

China announced on May 31 that married couples could have up to three children in a significant shift from the two-child limit following the recent release of data showing a dramatic drop in births in the world’s most populous country.

The House Moody’s, as reported by the Athens News Agency, pointed out that the reform reflects the risk of aging in the emerging markets of Asia.

“Although the China’s new policy allowing couples to have up to three children “It is unlikely to support fertility, it is unlikely to dramatically change the national birth rate, which means that aging will remain a credit-negative constraint,” Moody’s said in a statement. Shares of birth and fertility-related companies listed on Hong Kong and mainland China recorded a drop early this morning, following the announcement of Moody’s.

The decision to allow families to have up to three children has been met with caution in China, with citizens expressing doubts on social media whether this measure will make a significant difference and ask for details on which of the “support measures” announced will be available.

China abolished the one-child policy in 2016 and replaced it with the two-child limit in an effort to avoid the risks to its economy from rapidly aging populations. However, this did not translate into a sustainable increase in births, given the high cost of raising children, especially in urban centers.