Editorial | China’s childcare subsidy likely to be first of many family-friendly policies

The government has announced it will provide an annual subsidy of 3,600 yuan (US$501) for every child born on or after January 1 this year until they turn three, regardless of whether they are the first, second or third child. Last year, births in China rose for the first time since 2017, an uptick partly attributed to the auspicious Year of the Dragon in the Chinese zodiac.

This year, China’s population will slip below 1.4 billion people. While some may argue that, given its natural resources, the country could do with a smaller population, the effect of ageing and shrinking of the workforce on the structural population balance in the future has become a worry for policymakers. It has given rise to concerns about a “super-aged” society comparable demographically with Japan, where nearly 30 per cent of people are over 65.

The key to sustainable population planning now is not to reverse the population trend but to optimise the structure to help maintain economic growth and stability.

A related issue is the need for China to boost domestic economic consumption. One of the reasons that Chinese consumers are not spending more – including on having more children – is because of the state of the social welfare system. Many families still have to save their disposable income for elderly and child care and medical expenses.

More than 20 provinces across China have already experimented with childcare subsidies at various local levels, but this marks the first nationwide scheme introduced by the central government.