China has loosened its one-child policy and allowed couples to have two children if at least one parent is a single child. The new two-child policy is expected to boost New Zealand's baby formula exports.

New Zealand's infant formula industry is still feeling the impact of Fonterra's botulism scare which made international headlines and spurred China to ban imported milk.

China's Communist Party announcement is a welcome news to dairy exporters who want to recover the losses they sustained at the height of the Fonterra controversy. The two-child policy will not only allow Chinese parents to have a second child, but would also have another mouth to feed. The change in policy also meant share price gains for companies selling baby-related products.

The news boosted the shares of Yashili, a Chinese dairy farm with operations in Auckland and listed in the Hong Kong stock market. Yashili's share price gained 10 percent.

Gregg Wycherley, Auckland's Fresco Nutrition managing director, said the policy change will result in a spike in Chinese births. The company will soon launch a goat-milk baby formula in China. Michael Barnett, chairman of the New Zealand Infant Formula Exporters Association, said China's baby formula market will expand soon.

According to Euromonitor data, the Chinese infant formula market is worth $12.4 billion. The figure may double by 2017. The information was compiled before China changed its policy.

Many Chinese consumers have stayed away from New Zealand's milk products since the Fonterra botulism scare but Mr Barnett said the improvements made on trading conditions may help rebuild consumer relations.

Family Planning Still Observed

China's National Health and Family Planning Commission (NHFPC) has emphasized in its official Web site that China is gradually adjusting the current fertility policy for a more balanced population development. According to NHFPC Deputy Director Wang Anpei, the current fertility rate of China has dropped to an average level seen also in developed nations. Data also showed the population of the working-age has declined while the elderly population continued to grow.

Anpei said the basic national policy of family planning will still be observed to avoid a sudden spike in China's population. The Population and Family Planning Law shall still be strictly observed.