China Launches $1,500 Childcare Subsidy for Three Years to Boost Birthrate

(Digital Phablet) July 29 — China has introduced a nationwide childcare subsidy initiative aimed at encouraging higher birth rates, offering families CNY10,800 (USD1,500) per child during their first three years of life.

Children born from January this year will be eligible to receive CNY3,600 (USD500) annually for three years, according to Xinhua News Agency yesterday. These subsidies will be free from individual income tax and will not count as household or personal income when determining assistance eligibility.

China’s birth rate decreased from 2016 to 2023, impacted by rising living costs, delayed marriages, and younger generations favoring smaller families. Nonetheless, last year’s numbers saw a rebound, reaching 6.77 per 1,000 people, driven by increased government support and a slight influence from Chinese couples choosing to delay childbirth during the Year of the Dragon.

Childcare subsidies are among the key policies aimed at reversing the low birth rate and encouraging higher fertility. This year’s Government Work Report emphasized the importance of developing pro-natal policies, distributing childcare subsidies, establishing integrated childcare services, and expanding the availability of affordable childcare options across China.

Prior to this national policy, approximately 70 provincial, municipal, and county-level governments in China had implemented localized childcare subsidy programs. In some areas, families can receive up to CNY10,000 for their first child, CNY50,000 (USD6,970) for their second, and CNY100,000 (USD13,940) for their third or more.

The declining birth rate has also caused other concerns, such as significant impacts on the dairy and infant formula sectors. In fact, China’s infant formula market has shrunk by double-digit percentages since 2020.

The rollout of a comprehensive nationwide childcare subsidy is expected to boost social fertility and increase public confidence in having children, which will benefit the dairy and infant formula industries, according to Song Liang, a dairy industry expert, who spoke with Digital Phablet.

Nevertheless, population challenges extend beyond economics to complex social issues, Song noted, and he anticipates more comprehensive solutions will be introduced in the future.

Editor: Futura Costaglione