FXStreet (Bali) – According to ANZ, the end of one-child policy by China, is not expected to have a huge impact on New Zealand milk powder demand.
Key Quotes
“China announced overnight the end of its decades-old one-child policy, allowing all couples to have two children. This change is not expected to have a huge impact on New Zealand milk powder demand (in 9 months time!) as it is primarily in the richer Eastern seaboard cities where consumers can afford formula based on New Zealand powders.”
“Here, the policy has been less binding – particularly after the policy was relaxed somewhat in 2013, but also because wealthier people generally want fewer children. But it all helps at the margin.”
“Of course, it was not struggling New Zealand dairy farmers the Chinese Government had in mind when they announced the change; rather it is the steepest population ageing profile in the world.”
“In this regard, the die is already cast, with some demographic economists arguing that China will “get old before it gets rich”.
“The labour force is already shrinking, and wage growth has seen China’s competitiveness in low-end manufacturing steadily eroded against competitors. A worsening dependency ratio slows down economic growth as well as causing fiscal pressure and individual hardship.”
(Market News Provided by FXstreet)