TheStreet) -- Everyone loves a baby, including investors looking to profit from the recent liberalization of China's one-child policy.
Companies that make infant formula, incubators and squeaky toys are getting extra attention from Chinese stock investors now that most of the country's provincial governments have agreed to let more couples have two children.
Because Chinese parents often prefer foreign-brand baby food, global nutrition specialists poised to benefit include Abbott Laboratories
(ABT - Get Report), which this week announced a cooperative investment in China with the New Zealand dairy company Fonterra, and Nestle
(NSRGY), which bought Pfizer's
(PFE - Get Report) baby food business in 2012.
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Millions of babies are likely to be born over the next few years to mainland couples who, under the adjusted rules, are eligible for a second because either the mother or father has a parent who was an only child. Most will be born in major urban areas where China's consumer class is rising.
The near-term baby boom for couples between ages 25 and 34 could be as high as 11 million births, based on the current number of married adults in that age range, according to government research. Some experts speculate, however, that for financial reasons only about half of these couples may choose to have a second child.
Ultimately, regional government family planning agencies will control the demographic pace, as each second baby -- like all babies in China -- must be approved by government officials before birth is allowed. Authorities in recent years have been approving between 16 million and 18 million births annually under the 35-year-old, one-child policy, which has kept the birth rate at a relatively low 12 per 1,000 people since the late 1990s.
Provincial governments started gradually introducing the second-baby policy in January in line with central government orders issued last fall. As of early July, according to state media, 29 of 31 local governments had to some extent adjusted their rules. Previously, a second child was allowed only in some rural areas, while a few rural minority families could have more.