- China introduces an annual subsidy of 3,600 yuan (Rs 43,439) per child until age 3 to boost birth rates.
- China's population fell for the third consecutive year in 2024, with experts warning of a worsening downturn.
- Experts doubt the subsidy amount will impact birth rates, calling for more comprehensive measures.
China, once known for its strict one-child policy, is now taking a major step to address its growing population crisis. In a landmark move, the Chinese Communist Party government has announced its first national childcare subsidy. Starting January 1, 2025, families will receive 3,600 yuan (around US $500) per year for every child under the age of three. The subsidy will continue until the child turns three, aiming to ease financial burdens and encourage higher birth rates.
Authorities look to spur a flagging birth rate with fewer young people choosing to have children.
The high cost of childcare and education, as well as job uncertainty and a slowing economy, are among the concerns that have discouraged many young Chinese from getting married and starting a family.
The plan is an "important national livelihood policy," and direct cash subsidies would help "reduce the cost of family childbirth and parenting," the National Health Commission said.
Demographers and economists said while the move was positive, the amount was likely too small to incentivise people to have children.
China's population fell for a third consecutive year in 2024, with experts warning of a worsening downturn after decades of falling birth rates following a one-child policy adopted from 1980 to 2015, coupled with rapid urbanisation.
In the past two years provinces nationwide have started handing out childcare subsidies in amounts that vary considerably, from 1,000 yuan a child to up to 100,000 yuan, including housing subsidies.
The central government will fund the new national policy instead of local authorities, Xinhua said. Authorities are expected to announce more details on Wednesday. Zichun Huang, China Economist at Capital Economics, said the sums involved were too small to have a near-term impact on the birth rate or consumption.
"But the policy does mark a major milestone in terms of direct handouts to households and could lay the groundwork for more fiscal transfers in the future."
Citi Research estimates a total lump-sum payout of 117 billion yuan in the second half of this year through the plan, saying the scheme is more meaningful as a consumption policy than as a population policy.
"As a population policy, it remains to be seen whether the national program can move the needle on fertility rate," the research house said in a note.
Key Details:
Scope & Eligibility: The subsidy applies equally to first, second, or third children born on or after January 1, 2025. Children born prior to that date but still under three will receive a prorated amount based on the months remaining. The policy is expected to benefit more than 20 million families of toddlers and infants.
Maximum Benefit per Child: Up to 10,800 yuan total over three years.
Coverage Estimate: The scheme is expected to benefit more than 20 million families with children under three each year.
Tax & Social Benefits: Subsidies are exempt from individual income tax, and the payments will not count toward household or personal income for purposes such as minimum living allowances.
Implementation Timeline: Local governments are preparing systems, with subsidy applications expected to open from late August 2025 onwards, administered via online and offline channels tied to the child's registered residence.
(With inputs from Reuters)
