In a landmark effort to counter its steeply declining birthrate and rapidly aging population, China's State Council has announced a nationwide childcare subsidy offering annual payments of 3,600 yuan (approximately $500) for every child under the age of three. The measure, which will take effect starting January 1, 2025, marks the country's first centrally coordinated fertility support program, a significant shift from previous localized pilot initiatives.

"This plan was developed to implement the strategy of the Communist Party's Central Committee to improve the birth support system and incentive mechanisms, as well as promote the creation of a fertility-friendly society," the State Council said in a statement.

The subsidy will be available to children born before January 1, 2025, and will be prorated based on the number of eligible months remaining before a child turns three. Importantly, the benefit is exempt from personal income tax, and is expected to reach over 20 million families across the country.

Fertility Fallout

China's demographic crisis has worsened in recent years, with the national birthrate falling to 9.5 million in 2024, less than half the figure recorded in 2016. Even after the formal abandonment of the one-child policy in 2016 and the introduction of a three-child policy in 2021, fertility rates remain far below the replacement level of 2.1 births per woman.

Experts attribute this stagnation not only to the legacy of decades-long population control but also to rising child-rearing costs, a shrinking workforce, and limited social welfare provisions. A skewed gender ratio and mounting eldercare demands have compounded these challenges.

Read more: Falling birth rates threaten living standards in rich nations: FT

Natalist Shift

While the 3,600 yuan subsidy sets a national benchmark, some analysts warn that it may be too modest to significantly influence fertility decisions on its own. Pilot programs in cities like Tianmen and Hohhot, offering far larger lump-sum benefits and housing incentives, have produced modest upticks in births, suggesting that more comprehensive, high-value support packages may be necessary to produce meaningful change.

Nevertheless, this new subsidy program signals a structural policy pivot: away from population control and toward state-supported natalism. It also reflects Beijing's recognition that demographic health is tightly interlinked with economic resilience, long-term labor productivity, and social stability.

In that context, the plan is not just a fertility measure; it is a strategic recalibration of China's development model.