Nationwide Benefit Aims to Support Families with Children Under Three

In a bold step to address its declining birth rate, China has introduced an annual subsidy of $500 for each child under the age of three, effective retroactively from January 1, 2025. The announcement was made by state-run media on Monday, confirming that the Communist Party of China and the State Council—the nation’s cabinet, have formally approved the measure.

Demographic Crisis Deepens as Birth Rates Drop

UN Warns Population Could Halve by 2100

The initiative comes as China grapples with a worsening demographic crisis. The country’s population has fallen for three consecutive years, with just 9.54 million births recorded in 2024, a steep decline from the post-one-child-policy era that began in 2016.

Projections from the United Nations suggest that China’s population could plummet from 1.4 billion today to just 800 million by the year 2100 if current trends persist.

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Local Governments Offer Generous Birth Incentives

Regional Measures Add to Central Government Push

Several regional administrations have already implemented their own incentives to boost fertility rates. For example:

• Hohhot, the capital of Inner Mongolia, provides up to 100,000 yuan (~$14,000) for couples with three or more children.
• Shenyang offers 500 yuan per month to families with a third child until the child turns three.
• Hangzhou grants a one-time payout of 25,000 yuan for couples upon the birth of their third child.

Economic Experts Doubt Immediate Impact

“Too Small to Move the Needle,” Says Capital Economics Analyst

Despite the growing number of financial incentives, economists are cautious about their effectiveness. Zichun Huang, an economist at Capital Economics, noted:

“The sums involved are too small to have a near-term impact on the birth rate or consumption.”

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However, he added that the move may signal a shift in government policy:

“This policy could pave the way for more fiscal transfers in the future.”

China’s aging population further complicates the issue, with nearly 310 million people aged 60 and above as of 2024, placing increased pressure on public services and pension systems.

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