China plans to introduce new nationwide cash incentives for families with newborn babies in an effort to boost the country’s declining birth rate and ensure long-term economic growth.

Why It Matters

China ended its decades-long one-child policy in 2016, but the country’s fertility rate continued to decline for seven years, despite a raft of government policies. Officials fear that the demographic shift could have wide-ranging effects on the world’s second-largest economy in the years to come.

While the fertility rate last year bucked the trend, ticking upward to 1.2 births per woman from 1.0 in 2023, this was still well below the replacement rate of 2.1. Meanwhile, the population shrank for a third year, raising official concerns about the impact of these demographic shifts on China’s economy and global position.

What To Know

Under a new nationwide policy, central authorities will offer families a cash allowance of 3,600 yuan (about $500 USD) per year for each child born on or after January 1, 2025, Bloomberg reported, citing people familiar with the matter.

Payments will continue until the eligible child reaches the age of three.

This builds on previously announced local cash subsidies, though these have primarily targeted couples having their second or third child.

While these efforts have generally failed to boost birth rates, one notable exception is the Hubei province city of Tianmen, where incentives were followed by a notable surge in births last year.

Other measures have included subsidizing in vitro fertilization and providing child care subsidies.

Last month, officials announced that all tertiary-level hospitals would be required to provide epidural anesthesia during childbirth, aiming to make the experience less stressful and encourage higher fertility.

The policy follows a pledge by China’s No. 2 official, Premier Li Qiang, to introduce additional child care subsidies, although he did not provide details.

Experts have pointed to a range of factors behind the demographic decline, from gender discrimination in the workplace to the high cost of education.

What People Are Saying

Michelle Lam, a Greater China economist at French banking group Societe Generale, told Bloomberg: “[Central government subsidies are a] tiny but signals a change in mindset and paves the way for more stimulus to come. It’s a move in the right direction.”

He Yafu, an independent demographer, wrote on the Chinese social media platform WeChat in January: “Tianmen’s case proves that cash incentives are making a difference…If childbearing subsidies have no effect, it is because they are too small and need to be increased.”

What Happens Next

It remains to be seen whether the nationwide cash subsidies or other recent measures will be enough to offset the economic and cultural forces driving China’s declining birth rate.

The United Nations has projected that China’s population—currently about 1.4 billion—could shrink to under 800 million by 2100 if current trends hold.

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