From cash handouts to free pre-schools: How China is battling its birth rate collapse

This photo taken on January 16, 2025 shows a boy (C) playing on a swing in a park in Fuyang, east China's Anhui province. China said on January 17 its population fell for the third year running in 2024, extending a downward streak after more than six decades of growth as the country battles a looming demographic crisis. (Photo by AFP)

China’s central government has stepped in to directly address its plunging birth rate, announcing a new childcare subsidy on July 28 that offers families 3,000 yuan (around £312) per year for each child under the age of three. The move, reported by The Conversation, comes just days after a broader plan was unveiled to provide free preschool education across the country in a clear signal that Beijing now considers its demographic crisis a matter of national urgency.

Until now, the central government had left much of the policy experimentation to local authorities. Over the past few years, cities and provinces across China have tried a patchwork of measures -- from one-time cash payouts to housing support -- but these have had limited effect on reversing the trend of population decline. “Many of those efforts, which range from cash incentives to housing subsidies, have made little difference,” The Conversation notes.

At the heart of the problem is a changing social landscape. Fewer Chinese women are choosing to have children, and many young people are either delaying or opting out of marriage altogether. China’s population shrank for the third straight year in 2024. With a shrinking workforce and rapidly ageing population, the country faces serious long-term threats to economic growth, pension systems, and healthcare.

While Beijing’s involvement may represent a turning point, the scope of support remains limited. Regional efforts like those in Hohhot, Inner Mongolia, which offers up to 100,000 yuan (£10,400) for second and third children, paid annually until age ten, remain the exception, not the rule. Other cities, including Hangzhou, have distributed daycare vouchers or monthly subsidies, with only modest local gains and no significant national impact.

One major reason these policies haven’t worked is that the incentives are simply too small. “The subsidies are generally small, often equivalent to just a few hundred US dollars. This barely makes a dent in the cost of raising a child in urban China,” the report says. According to the Beijing-based YuWa Population Research Institute, raising a child in China now costs 538,000 yuan (£59,275) -- more than 6.3 times the country’s GDP per capita. It’s no surprise that many Chinese refer to children as tunjinshou, or “gold-devouring beasts”.

The root of the issue goes deeper. Expensive housing, education pressures, limited childcare options, and job insecurity, especially for women, all play a role. “Many Chinese women fear being pushed out of their jobs simply for having kids,” The Conversation explains. Even in places like Tianmen, where families with a third child can get US$16,500 (£12,500) off a new home, such offers remain localized and hard to scale.

There’s also a major gender gap. Women still carry most of the burden of childcare and housework, and leave policies reflect that imbalance. Mothers can take 128 to 158 days of leave, but fathers are granted only a few days, depending on the province. “Despite public calls for equal parental leave, major legal changes seem far off,” the report adds.

In surveys, even large financial rewards haven’t swayed public sentiment. In one online poll from 2022, 90% of Chinese respondents said they wouldn’t consider having more children even if given a 12,000 yuan (£1,250) annual subsidy -- four times the recently announced amount.

So, is Beijing too late? While the latest announcements mark a shift in strategy, history offers little comfort. South Korea has spent decades offering generous subsidies and extended leave, yet its birth rate remains among the world’s lowest.

The United Nations projects that China’s population will shrink by 204 million people between 2024 and 2054, and by 786 million by the end of the century, bringing it back to 1950s levels.

Still, this is the first time Beijing has used national fiscal policy to support childbirth, and it may be just the beginning. As The Conversation notes, “if urgency keeps rising, the size and scope of support may increase as well.” But money alone won’t solve the crisis.

“Parenting must be made truly viable and even desirable,” the report argues. That means not just cash, but childcare infrastructure, workplace reform, and a cultural shift that treats parenting as a shared responsibility, not a woman’s burden.

The final note is personal: “My generation, which was born under the one-child policy, grew up in a time where siblings were heavily fined. I was one of them. But, just as fines didn’t stop all of those who wanted more children, cash rewards will not easily convince the many who don’t.”