China unveils childcare subsidies in fertility push

China is introducing annual childcare subsidies of 3,600 yuan (US$500) per child under three, as it seeks to counter a continuing drop in birth rates.

The national programme, launched this week, is expected to benefit more than 20 million families with toddlers and infants. It will be funded by the central government, with partial support also available for children under three born before 2025.

The move follows the country’s third consecutive year of population decline in 2024. High childcare and education costs, job insecurity, and a slowing economy have all been cited as reasons many young people are choosing not to start families.

The National Health Commission called the initiative an “important national livelihood policy”, saying direct cash subsidies would help “reduce the cost of family childbirth and parenting”.

Demographers and economists welcomed the announcement but cautioned that the sums involved are unlikely to significantly alter family planning decisions.

 Zichun Huang, China economist at Capital Economics said: “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 future,” said

China’s birth rate has declined for decades, shaped by the one-child policy in place from 1980 to 2015 and accelerated by rapid urbanisation.

Authorities are now facing a demographic challenge, with around 300 million people expected to retire in the next ten years—nearly the size of the US population.

In the past two years, some provinces have launched their own childcare support schemes, with benefits ranging from 1,000 yuan per child to up to 100,000 yuan when combined with housing subsidies.

Citi Research estimates the new national scheme could result in lump-sum payments totalling 117bn yuan in the second half of 2024.

The firm said the scheme was “more meaningful as a consumption policy than as a population policy”.

“As a population policy, it remains to be seen whether the national programme can move the needle on fertility rate,” it said in a note.

Emma Zang, a demographer and professor at Yale University, said that while the national rollout may bring more coordination and signal greater central commitment, broader reforms are still needed.

She said: “Without sustained structural investment in areas like affordable childcare, parental leave, and job protections for women, the effect on fertility is likely to remain minimal.”