China’s New Family Planning Regulations: The Impact on Your Business

They can often be difficult to navigate, yet with a population of almost 1.4 billion people, China’s family planning laws are incredibly important.

While many people may be aware of China’s previous ‘one child policy’, the country also had a number of other rules and regulations in place designed to control population growth. These included late-marriage or late-childbirth incentives, in the form of extra holidays, to encourage couples to marry later and give birth to just one child.

The year 2016, however, has seen these policies dropped in a dramatic change in the government’s stance.

New national and local legislation may cause complications for businesses operating in China on two fronts

In the closing months of 2015, the Chinese government began its pivot to a looser family planning approach, indicating that it would soon allow couples to have two children. More recently, on January 1 of this year, new family planning legislation was enacted and the late-marriage and childbirth incentives were dropped, further relaxing population controls.

With the average marriage age in China becoming increasingly older, and the ‘one child policy’ being abandoned altogether, many incentives to discourage childbirth are no longer necessary.

For businesses, it’s important to maintain a cautious approach and be receptive to any changes in the coming weeks, particularly on the local level.

Impact on Business

Up until last year, base maternity leave across China stood at 98 days. Those couples that decided to delay childbirth beyond a certain age would be granted an additional period of leave.

Specific regulations varied by province, but typically, ‘late childbirth’ was defined as having a child after the age of 24. Additional leave periods varied from 15 days to 60 days, by province. This no longer stands, however, as the new regulation drops these clauses.

While some outdated policies have been abandoned, they will likely be replaced, to some extent, with added benefits in the form of extended maternity and paternity leave on a local level. However, despite national policy being effective as of January 1, there have still not been many announcements from provincial governments.

New national and local legislation may cause complications for businesses operating in China on two fronts. Firstly, despite the new legislation applying nationwide, individual provinces may soon publish their own additions. Although China is moving towards a ‘two-child policy’, it’s important to be aware that local changes to maternity leave, and related laws, will likely occur.

Secondly, businesses may be in a vulnerable position during the transition period between the old and new regulations. The local government in Shanghai has taken steps to address concern surrounding this ‘cross-over’ period by stating that only those who were married before December 31 will be able to enjoy the benefits previously associated with late-marriage or childbirth. 

Guangdong Legislation

The southern province Guangdong is the first in the country to revise its maternity leave rules in the wake of the ‘two-child policy’ being introduced nationwide. Being the first, it sets a precedent for what we might expect to see from other provinces in the coming weeks.

Maternity leave has been increased from the national baseline of 98 days to 128 days, while paternity leave in Guangdong now stands at 15 days, up from 10 days

While national policy is aimed at encouraging more couples to have two children, Guangdong has loosened a number of other rules, in addition to scrapping late-marriage and late-childbirth incentives.

In Guangdong, adoption no longer influences the right to give birth to your own children, and restrictions have also been lifted concerning giving birth to more children in cases where a child dies.

Notably, maternity leave has been increased from the national baseline of 98 days to 128 days, while paternity leave in the province now stands at 15 days, up from 10 days.

At this point, those who still choose to have just one child will continue to receive certain benefits, as was previously the case.

Be Cautious and Prudent

The Guangdong local government has reiterated that the era of family planning in China is not over. Rather, legislation has merely been revised from a ‘one-child policy’ to a ‘two-child policy’.

Shanghai has yet to publish local legislation but is widely expected to follow a similar approach to Guangdong. Thus far, in line with the state policy, late-childbirth and late-marriage incentives will no longer be offered.

Most provinces are expected to publish legislation in the coming weeks or months, likely replacing previous incentives to discourage childbirth with longer maternity leave, and other benefits designed to reverse population trends.

But it’s important to bear in mind that each province may end up following a slightly different approach.

During the ‘cross-over’ period, it is advisable to take a cautious approach, following the new national legislation but also remaining aware of any local revisions that may occur in the opening months of 2016.

About the Author

Dezan Shira & Associates, a specialist foreign direct investment practice that provides advisory services to multinationals investing in emerging Asia. This story is based on two articles first published in China Briefing, and was reedited for clarity and conciseness. For further details or to contact the firm, please visit www.dezshira.com.

Photo credit: Shutterstock

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