On Monday, China introduced an annual childcare subsidy of 3,600 yuan (approximately $500) for children up to three years old, aiming to address the declining birth rate as fewer young couples opt to start families.
Concerns over the high costs of childcare and education, along with job instability and a sluggish economy, have deterred many young Chinese from marrying and having children.
The subsidies will begin this year, with partial assistance available for children born before 2025, benefiting over 20 million families with toddlers and infants, as reported by the official Xinhua news agency.
The National Health Commission described the initiative as an “important national livelihood policy,” stating that direct cash support will help “lessen the financial burden of childbirth and parenting.”
However, demographers and economists caution that while the policy is a step in the right direction, the subsidy amount may be insufficient to encourage higher birth rates. China’s population has declined for three consecutive years, with experts foreseeing a more severe downturn, influenced by decades of low birth rates stemming from the one-child policy (1980-2015) and rapid urbanisation.
In recent years, various provinces have been offering childcare subsidies ranging from 1,000 to 100,000 yuan, including housing support. The central government will finance this new national initiative, with further details expected to be unveiled on Wednesday.
Zichun Huang, an economist at Capital Economics, remarked that the financial support is unlikely to make a significant short-term impact on birth rates or consumption. However, he noted that this policy marks a significant development in direct financial assistance to families, potentially paving the way for future fiscal transfers.
Citi Research predicts a total payout of 117 billion yuan in the latter half of this year through the scheme, suggesting its primary significance lies in stimulating consumption rather than directly influencing population growth. They stated, “It remains uncertain whether this national programme will effectively increase the fertility rate.”
In response to the challenge posed by the impending retirement of about 300 million individuals in the coming decade, China has introduced a range of “fertility-friendly” measures in 2024. Demographer Emma Zang from Yale University suggested that while a nationwide scheme could enhance coordination and reflect a stronger central commitment, more substantial efforts are necessary. “Without ongoing structural investments in affordable childcare, parental leave, and job protections for women, the impact on fertility rates is likely to remain minimal,” she concluded.
