China Plans Subsidies To Boost Birthrate As Slim Population Threatens GDP Growth

China is planning to offer cash handouts to families as an incentive for couples to have children, according to people familiar with the matter, as years of population decline threaten the world’s No. 2 economy.

The government is set to provide 3,600 yuan ($503) a year for each child, born on or after Jan. 1 this year, until they turn three under a nationwide initiative, said the people, asking not to be identified as the details are not public.

China’s State Council Information Office didn’t reply to a faxed request for comment. While China abandoned its one-child policy about a decade ago, its population registered a decline for three straight years through 2024.

New births at 9.54 million last year was only half of the 18.8 million registered in 2016 when China lifted the policy that allowed couples to have only one child.

Diminishing birthrate is a challenge for the world’s second-largest economy, where the working-age population has been shrinking in a threat to labor supply and productivity.

China, which lost its title as the most populous nation to India in 2023, may see its population drop further to 1.3 billion by 2050 and below 800 million by 2100, according to the UN’s demographic modeling.

That outlook stems from the alarming drop in marriage rates, which hit its lowest level in almost half a century and could lead to even fewer births

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The worrying trend has already prompted many local governments to roll out measures, from offering cash incentives to providing housing subsidies, to help alleviate families’ financial burden and encourage births.

Local subsidies in some cases can be quite generous. Hohhot, the regional capital of Inner Mongolia, made national headlines in March for its subsidies of 50,000 yuan to couples who have a second child and 100,000 yuan for a third or more.