China launches $500 child subsidy to boost birth rate
What's the story
To combat its declining birth rate, the Chinese government has launched annual subsidies of $500 for each child under three years old. The decision was announced by Beijing's state media on Monday and is retroactive from January 1. The ruling Communist Party and the State Council, China's cabinet, approved this policy.
Demographic crisis
China's population declining for 3 years in a row
China's population has been declining for three years in a row, with only 9.54 million births last year. This is a sharp drop from 2016 when the one-child policy was scrapped after being in place for over 30 years. The United Nations projects China's population could shrink from 1.4 billion now to 800 million by 2100 under current trends.
Regional initiatives
Local governments have also introduced their own subsidies
Local governments have also introduced their own subsidies to encourage childbirth. For instance, Hohhot—the capital of China's northern Inner Mongolia region—offers up to 100,000 yuan ($14,000) for couples with three or more children. Shenyang gives families with a third child 500 yuan monthly until the child turns three. Hangzhou provides a one-time payment of 25,000 yuan for couples who have a third child.
Economic impact
Experts skeptical about impact on birth rate
Experts remain skeptical about the potential impact of these subsidies on reversing China's population decline and boosting domestic spending. Zichun Huang, a China economist at Capital Economics, said "the sums involved are too small to have a near-term impact on the birth rate or consumption." However, he acknowledged that this policy could pave the way for more fiscal transfers in future. China's shrinking population is also getting older, with nearly 310 million people aged 60 and over in 2024.