SYDNEY -- China's plan to allow all couples have two children is positive for its growth despite not reversing a shrinking population, an economist told Xinhua here on Friday.

Frederic Neumann, co-head of Asian economic research at HSBC, said the demographics are often overplayed, as urbanization potential in China "is enormous" while children are becoming more educated.

"So young people joining the labor force even though becoming less and less, actually are far superior educated than those leaving the workforce, raising human capital in the economy," Neumann said.

Neumann said the policy change aids China's rebalancing away from the old industrial-led growth to its consumption services, effectively increasing investment in education, healthcare and areas of consumption.

The policy change, which will see China abandon its decades-old one-child policy, was proposed at the Fifth Plenary Session of the 18th Communist Party of China (CPC) Central Committee held from Oct. 26 to 29.