China Introduces Nationwide Cash Subsidy for Parents to Boost Birth Rates

On May 12, 2022, nurses provided care to newborns at a hospital in Yongzhou, Hunan Province, as China unveiled a new nationwide initiative aimed at supporting parents financially. This groundbreaking policy, announced on Monday, will provide a cash subsidy of 3,600 yuan annually for each legally born and Chinese national child aged three or younger, with payments commencing retroactively from January 1, 2025. For children born before this date who are still below the age of three, the subsidy will be calculated based on the eligible months since the implementation date.

The National Health Commission (NHC) stated that this new childcare subsidy system signifies a major public policy shift that will positively impact millions of households. The initiative represents a long-term investment in the well-being of families and aims to promote a supportive environment for childbearing, addressing China's declining birth rate, particularly among first-born children. Unlike previous local programs that typically excluded subsidies for first children, the national policy ensures equal subsidies for first, second, and third children, addressing demographic concerns more comprehensively.

He Yafu, a noted demographer, emphasized the difference in approach that this nationwide policy presents in comparison to previous local subsidies. Furthermore, He Dan from the China Population and Development Research Center highlighted that the policy's uniform subsidy for all children demonstrates inclusivity and fairness, an essential characteristic under the three-child policy framework. Local governments are currently working on detailed plans for implementing this subsidy, with applications expected to open gradually by late August.

Financial support will be allocated to different regions based on their financial capabilities, while local governments may add to the subsidy level using their own resources. Zhu Kun from the Chinese Academy of Fiscal Sciences pointed out that the new subsidy standards align well with global practices, suggesting a reasonable percentage of subsidy relative to the country's per capita GDP. However, experts caution that while cash subsidies can positively influence birth rates, they should ideally be part of a broader support system that encompasses maternity leave, childcare services, education, and housing initiatives to effectively encourage families to have more children.