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Asia Briefing

How China’s New ‘Family Planning’ Regulations Will Affect Foreign Businesses

They can often be difficult to navigate, yet China’s family planning laws are incredibly important in a China_1456497367_64276  country with a population of almost 1.4 billion people. 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.

In 2016, however, China has dropped these policies in a dramatic change in the government’s stance. 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 late-marriage and -childbirth incentives 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.

New Legislation for 2016 

Up until last year, base maternity leave across China stood at 98 days. Those couples who 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While some outdated policies have been abandoned, they will likely be replaced, to some extent, with added benefits in the form of extended maternity and paternity leave on a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 this year, there have still not been many announcements from provincial governments. The southern province of Guangdong is the first in the country to revise its maternity leave rules in the wake of the two-child policy being introduced nationwide. 

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

Second, businesses may be in a vulnerable position during the transition period between the old and new regulations. Shanghai’s local government has taken steps to address concerns surrounding this crossover 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. Nonetheless, it’s important to maintain a cautious approach and be receptive to any changes in the coming weeks, particularly on a local level.

Guangdong Province First to Publish Local-Level Legislation

Being the first area to publish local legislation, Guangdong sets a precedent for what we might expect to see from other provinces in the coming weeks. While national policy is aimed at encouraging more couples to have two children, the province has, in addition to scrapping late-marriage and late-childbirth incentives, loosened a number of other rules. Adoption no longer influences your 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 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. 

A Cautious, Prudent Approach Is Advisable

In late 2015, an examination system existed for those couples who wished to have a second child. This has now been abolished on a national level and replaced with a far simpler registration procedure, opening up the possibility of a second child to all couples. Despite these advances, 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. 

However, it’s important to bear in mind that each province may end up following a slightly different approach. Shanghai, for example, 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.

The new year has heralded significant reform to China’s family planning legislation as the government looks to shift its course to a two-child policy and re-balance the population. Although only Guangdong has so far released accompanying revisions, many other provinces are expected to take similar action and make adjustments to maternity leave and related laws. Late-marriage and late-childbirth benefits have been discarded, but other benefits will now be introduced to take their place. During the crossover 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. 

Since its establishment in 1992, Dezan Shira & Associates has been guiding American investors through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, including liaison offices in Boston and Waltham specifically established to support our American clients, we are your reliable partner for business expansion in Asia and beyond. For inquiries, please email us at [email protected]. Further information about our firm and how we can support American investors in Asia, please visit our North American Desk.