Shanghai announces new isolation conditions for children with covid-19 0:45
(CNN Business) --
Having children is expensive, no matter where in the world you live.
But, while the United States is in the middle of the cost scale, China has become one of the most expensive places to raise children.
South Korea tops the list of the most expensive places to raise a child from birth to 18, measured as a percentage of gross domestic product per capita, according to Jefferies research using data from Yuwa Population Research.
GDP is the broadest measure of a nation's economic activity.
China ranks second, followed by Italy.
The United States is in the middle of the 14 most expensive places, between Germany and Japan.
However, in terms of the absolute amount of money spent, China is one of the cheapest places to have children.
But it's all relative: "If we adjust that data to the percentage of median disposable income, China becomes the most expensive place to raise children," say the Jefferies researchers.
ANALYSIS |
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What is it that makes it so expensive to raise children in the Far East?
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A large part is the cost of education and the cost and availability of care when the child is young.
Preschool services in China have been mostly private until recently, according to Jefferies.
It takes more than $75,000 to raise a child to 18 in China and another $22,000 to go to college.
Although this sounds like much cheaper tuition than what students in the United States can afford, there is a key difference: "In many other Western countries, a government-provided student loan is more common. transfers to one's own children," Jefferies analysts note.
In the United States, for example, 55% of undergraduate students graduated with debt in the 2019-2020 academic year, according to data from the College Board.
What the government can do
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Lawmakers have many options to lower the cost of having children, including subsidizing child care to bridge the gap between people in different income classes.
Beijing is already stepping in to make after-school tutoring more accessible.
Next on the list could be the cost of nurseries and kindergartens, analysts at Jefferies say.
"We understand that the government is looking for the state to provide these services and/or regulate the price of private services," they said.
China's government announced in its current five-year plan that it aims to increase the number of nursery places for children under the age of three to 4.5 per 1,000 people by 2025, two and a half times the current number of 1.8 per every 1,000.
Right now, there are 42 million Chinese children under the age of three.
The parents of a third of them want them to go to daycare, but only 5.5% can, according to the Jefferies report.
China encourages families to have more children 0:46
More wealth equals fewer children
Birth rates in richer countries tend to be lower than in developing nations.
This is known as the "demographic-economic paradox", which means that those with more means choose to have fewer children than people with less income.
"As China develops economically, it is quite possible that it will fall into the demographic-economic paradox like many other developed countries, and the birth rate could fall to a lower level than many expected," the analysts said. from Jefferies.
Even now, Chinese couples are reluctant to have more than one child due to the high cost of raising them.
While couples in Western countries seem to want two to three children, the numbers are lower in the East.
In addition, the number of marriages is also decreasing.
But in Asian cultures, having children out of wedlock is much rarer than in the West.
In China you can have 3 children per couple: the details of the regulations
Demographic trends, like birth rates, affect a country's businesses and economy.
Aging populations are having trouble maintaining their welfare systems, including Social Security and public pensions, as the workforce shrinks.
Over time, this can increase the need for things like automation to fill in for missing workers.
According to analysts at Jefferies, demographic trends are also affecting companies and stocks, albeit many decades in advance.
"We expect to see continued and significant momentum to reduce the cost of parenting around the world and, more specifically, in China," they noted.
That could include tax breaks, cash donations and grants.
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