The country that once limited babies is now paying for them

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 until they turn three under a nationwide initiative starting from 2025, 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.

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.

While many local governments have offered such subsidies, they are mostly only targeted at families with a second or third child. In one example last year, the eastern Chinese city of Hefei announced 2,000 yuan in subsidies for a second child and 5,000 yuan for a third child.

Nationwide subsidies covering families with one child are a necessary incentive, Huatai Securities Co. said in a research note posted on its WeChat account Friday. Childcare subsidies in most regions do not subsidize the first child and as such prove to be an inadequate incentive to improve the overall birthrate, it said.

Chinese premier Li Qiang had pledged to hand out childcare subsidies in his annual government work report in March, without sharing the details.

Michelle Lam, Greater China economist at Societe Generale SA, estimated the nationwide subsidies would account for around 0.1% of the nation’s gross domestic product.

It’s “tiny but signals a change in mindset and paves the way for more stimulus to come,” she said. “It’s a move in the right direction.”