Baby Boom in China – Maternity Hospitals Dealing With Record Numbers of Deliveries

To no one’s great surprise, the complete lifting of the one-child policy in late 2015 has resulted in a huge jump in the number of deliveries in China. In Beijing, for example, recently reported data based on birth registrations predicts more than 400,000 babies will be born in the capital in 2016. To give some context to this number, the previous record in the last five years was 2012, the year of the dragon, when there were 220,000 deliveries. Chinese couples pay close attention to the Chinese horoscope and unfavorable years like 2015, the year of the sheep, resulted in only 172,000 births in Beijing. In comparison to these numbers the 80% increase to 400,000 births expected in 2016 compared to the next highest year, 2012, is an amazing number. Shanghai is experiencing a similar surge in births and it can be assumed that other cities are also seeing this phenomenon.

The one-child policy had been originally modified in late 2013 to allow two children in families in which either parent was an only child. This policy was subsequently modified and fully lifted in 2015. It can only be speculated as to why the government finally took this step but it seems likely that it is related to a rapidly aging population and the effect this would have on the economy down the road. Given the uncertain economic environment in China with rising housing and food costs, as well as a stagnant job market, some commentators (including yours truly) had been predicting only slight increases as a result of the rule change in 2013. This view has been completely obviated by the recent data. Apparently, the drive to have more than one child is so strong that any concerns about the economy, the stock market or other financial issues have become irrelevant. Of course it must be asked, how long will this surge last?

At the present time, Beijing has a bed capacity to allow just over 275,000 births a year and public hospitals are scrambling to add more beds and increase their capacity to meet their current demand. The opportunity for existing private hospitals is quite strong; however, adding capacity in the private sector can be difficult because of government regulations and lengthy delays in gaining the required approvals. Previously, the market for maternity hospitals was considered saturated in the major cities like Beijing and Shanghai and new maternity hospital projects were focusing on the so-called ‘second tier’ cities. What must also be considered is that even if the demand is now quite strong for new maternity hospitals, many of the major cities have freezes in effect for new hospital licenses. Whether these will be lifted in the face of this surge in demand remains to be seen.

One take-away from this data is never underestimate the Chinese healthcare marketplace. This is a strong, vibrant marketplace with a great deal of untapped demand.

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