China Launches Childcare Subsidies to Combat Declining Birth Rate

In an effort to combat its declining birth rate, China will provide parents with an annual childcare subsidy of 3,600 yuan. This initiative, announced on Monday, will support all children under the age of three. The program will be applied retroactively from January 1, 2025, with families who had children between 2022 and 2024 also eligible for partial subsidies, according to reports.

The National Health Commission estimates that this nationwide subsidy will benefit nearly 20 million families. Importantly, these subsidies will not be considered taxable income nor will they affect eligibility for poverty assistance programs.

Earlier this year, the National Bureau of Statistics reported that China's population had decreased for the third consecutive year in 2024. The population fell by 1.39 million, reaching 1.408 billion, as deaths continued to outnumber births. The previous year saw a decline of 2.08 million, which was double the drop from the year before, marking the first population decrease in six decades.

China's birth rate has been declining for decades, influenced by the "one-child policy" implemented from 1980 to 2015 and rapid urbanization. The "one-child policy" also contributed to a skewed sex ratio due to a cultural preference for male children. Furthermore, marriage rates have also decreased, with 6.1 million marriage registrations in 2024 compared to 7.7 million the previous year.

The subsidy scheme follows regional experiments with childcare incentives in over 20 provinces. For example, Hohhot, the capital of Inner Mongolia, introduced a policy in March offering parents up to 10,000 yuan annually until their third child turns ten, along with free daily milk for new mothers and a voucher for dairy products. Cities like Shenyang and Changchun offer subsidies ranging from 1,800 to 3,600 yuan per child, and some regions provide one-time birth bonuses.

While the subsidies are not expected to cover all childcare expenses, they are intended to help with essential costs, such as baby formula and diapers, thereby reducing the financial burden on families.

However, critics suggest that declining fertility rates are not solely a financial issue. Demographers argue that the high cost of childcare and education, job insecurity, and a slowing economy are discouraging young Chinese people from marrying and starting families. They also point to gender discrimination and traditional expectations for women to manage the household as contributing factors.

Experts believe that without sustained structural investments in areas like affordable childcare, parental leave, and job protections for women, the impact on fertility rates is likely to be limited. To foster a more "fertility-friendly society," the southwestern province of Sichuan has proposed extending marriage leave and increasing maternity leave.