China Launches First Nationwide Baby Subsidy To Fight Population Decline; Spending Set At Over Rs 1 Lakh Crore

China has rolled out its first nationwide childcare subsidy in a bid to tackle a worsening demographic crisis. Under the scheme, families will receive 3,600 yuan (about Rs 42,000) annually for each child under three years old, regardless of income.

Economists say the impact will vary sharply across regions. In poorer provinces like Gansu, the payout equals over 13 per cent of the average annual income, compared with just 4 per cent in wealthy Shanghai. Analysts expect the benefit to boost spending more in less affluent areas, though its effect on birth rates is uncertain.

China’s fertility rate has plunged from 1.5 before the pandemic to barely above 1.0 last year. While some analysts, including at Morgan Stanley, believe the subsidy could slow the decline, others argue it won’t reverse deeper social trends such as delayed marriage.

Similar measures in Japan, South Korea and Singapore have had limited success in lifting birth rates, even with far larger payouts, suggesting China’s challenge may be harder to fix with cash alone.