China's Struggle with Economic Revival and Declining Birth Rates

In recent years, China's leadership has found it difficult to invigorate the economy, grappling with a persistent property crisis that has caused uncertainty among potential homebuyers and discouraged many from starting families. Following a series of aggressive measures aimed at boosting consumption, including key interest rate cuts and the removal of specific restrictions on home purchases, the outcomes have unfortunately been modest.

As the nation confronts troubling demographic shifts, the situation is becoming increasingly concerning. Last year, China's population decreased by 1.39 million, and marriage rates have plummeted to historic lows. During a press conference in Beijing, Wang Haidong, an official from the National Health Commission, acknowledged that the country has moved from experiencing population growth to entering a phase of decline.

Wang pointed out that to adapt to this altered demographic reality, the government is working to enhance its fertility support policy framework. This includes efforts to ease the financial burdens associated with giving birth, raising children, and their education, in a bid to foster a society that is more supportive of family growth. Economist Zichun Huang from Capital Economics mentioned that the planned subsidy of US$500 per child might not have a significant immediate influence on birth rates or consumer spending, yet it could pave the way for more substantial child support initiatives in the future.

Furthermore, a finance ministry representative confirmed that a preliminary budget of 90 billion yuan (approximately US$12.5 billion) will be allocated for this new initiative in the current year. Recently, China's highest-ranking officials convened for an economic meeting led by President Xi Jinping, where he highlighted the "numerous risks and challenges" the economy faces. Xi urged the government to enhance and time their macroeconomic policies effectively, as reported by state media Xinhua.