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Mint
4 days ago
- Business
- Mint
China's baby bonus: Can cash incentives convince young Chinese to have kids?
As China prepares to roll out a nationwide child-care subsidy next year, policymakers are betting that modest cash incentives will help reverse one of the country's most worrisome long-term trends: its shrinking population. The central government is planning to provide 3,600 yuan ($503) a year for each child under age three, starting in 2025, according to recent Chinese state media reports. The move marks the first national-level effort to directly support families with newborns, following years of local experimentation and mounting concern over declining birthrates. If the subsidy amount seems paltry by American standards, keep in mind that China's nominal per capita income this year was just $13,687, according to IMF estimates. China's population has contracted for three consecutive years, with just 9.54 million births in 2024—down from nearly 19 million in 2016. The drop poses a structural threat to the world's second-largest economy, where fewer young people mean a shrinking workforce, waning productivity, and growing pressure on the pension system. But whether the few hundred dollars a year will convince reluctant young couples to start families is far from certain. 'I can see the government is trying, but it's not enough to change my mind," said Liu Wen, a 28-year-old marketing analyst in Hangzhou. 'The cost of raising a child here isn't just diapers and formula—it's school, housing, and our own careers. A subsidy won't fix that." That sentiment reflects a broader challenge facing Beijing. While the new program represents a shift in the central government's willingness to fund pronatalist policy, analysts say its size may be too small to shift behavior in a meaningful way. Goldman Sachs estimates the total cost of the program at around 100 billion yuan ($14 billion) annually in a steady state, or less than 0.1% of GDP. Because the subsidies will also retroactively cover children born before January 2025 who are still under age three, Goldman projects a larger 250 billion yuan expenditure in the second half of 2025. Even so, the impact on growth is expected to be modest—adding about 25 basis points to GDP in late 2025 but fading quickly thereafter. 'International experience suggests that a program of such size may not boost birthrates by much," Goldman analysts wrote in a recent report, adding that the move reflects 'China's new policy thinking and long-term planning to counteract cyclical and structural growth headwinds." Michelle Lam, Greater China economist at Société Générale, said in a note that the measure was 'tiny" in scale but notable for signaling 'a change in mind-set and [paving] the way for more stimulus to come." Indeed, the symbolic weight of the policy may matter more than its near-term effect. For years, central authorities avoided the direct handouts common in other advanced economies, preferring tax breaks or indirect support. Now, China appears to be embracing a more direct approach, with the central government reportedly funding up to 95% of the program in less-developed regions. Some local governments have already gone further. Hohhot, the capital of China's Inner Mongolia region, offered couples 50,000 yuan for a second child and 100,000 yuan for a third earlier this year. Cities like Hefei, Tianmen, and Panzhihua have also implemented targeted programs, with mixed results. Goldman notes that Tianmen saw a temporary reversal in birthrate declines after launching its subsidy in 2023, while Panzhihua managed to slow the drop. Still, experts caution that financial incentives alone are unlikely to reverse deeper societal trends. China's marriage rate hit a nearly 50-year low last year, and many young people cite job insecurity, high housing prices, and burnout as reasons to delay or forgo parenthood entirely. That's especially true in major cities, where career pressure and the high cost of living collide. 'I'm still trying to pay off my own student loans and save for a down payment," said Zhang Rui, a 32-year-old software engineer in Shanghai. 'How can I think about a baby right now?" Beijing has started to acknowledge these structural obstacles. In his annual government work report this March, Premier Li Qiang pledged to expand child-care services and reduce the burden on working families. But details remain sparse, and the pace of implementation is uneven. For investors, the implications go beyond demographics. A sustained drop in births could weigh on long-term growth, consumer demand, and labor supply, while also reshaping sectors from education and housing to healthcare and insurance. The question now is whether China's latest policy shift marks the beginning of a broader family support agenda—or merely a symbolic gesture. Either way, the stakes are clear. United Nations projections suggest China's population could fall to 1.3 billion by 2050 and below 800 million by 2100. Without a meaningful rebound in fertility, China's economic future may rest on a shrinking base. For now, though, most young families seem unconvinced that a few thousand yuan a year is enough to tip the scales. Write to editors@
Miami Herald
07-07-2025
- Business
- Miami Herald
China's New Cash Plan to Tackle Birth Rate Threat
China plans to introduce new nationwide cash incentives for families with newborn babies in an effort to boost the country's declining birth rate and ensure long-term economic growth. Newsweek reached out to the Chinese Foreign Ministry via email for comment. China ended its decades-long one-child policy in 2016, but the country's fertility rate continued to decline for seven years, despite a raft of government policies. Officials fear that the demographic shift could have wide-ranging effects on the world's second-largest economy in the years to come. While the fertility rate last year bucked the trend, ticking upward to 1.2 births per woman from 1.0 in 2023, this was still well below the replacement rate of 2.1. Meanwhile, the population shrank for a third year, raising official concerns about the impact of these demographic shifts on China's economy and global position. Under a new nationwide policy, central authorities will offer families a cash allowance of 3,600 yuan (about $500 USD) per year for each child born on or after January 1, 2025, Bloomberg reported, citing people familiar with the matter. Payments will continue until the eligible child reaches the age of three. This builds on previously announced local cash subsidies, though these have primarily targeted couples having their second or third child. While these efforts have generally failed to boost birth rates, one notable exception is the Hubei province city of Tianmen, where incentives were followed by a notable surge in births last year. Other measures have included subsidizing in vitro fertilization and providing child care subsidies. Last month, officials announced that all tertiary-level hospitals would be required to provide epidural anesthesia during childbirth, aiming to make the experience less stressful and encourage higher fertility. The policy follows a pledge by China's No. 2 official, Premier Li Qiang, to introduce additional child care subsidies, although he did not provide details. Experts have pointed to a range of factors behind the demographic decline, from gender discrimination in the workplace to the high cost of education. Michelle Lam, a Greater China economist at French banking group Societe Generale, told Bloomberg: "[Central government subsidies are a] tiny but signals a change in mindset and paves the way for more stimulus to come. It's a move in the right direction." He Yafu, an independent demographer, wrote on the Chinese social media platform WeChat in January: "Tianmen's case proves that cash incentives are making a childbearing subsidies have no effect, it is because they are too small and need to be increased." It remains to be seen whether the nationwide cash subsidies or other recent measures will be enough to offset the economic and cultural forces driving China's declining birth rate. The United Nations has projected that China's population—currently about 1.4 billion—could shrink to under 800 million by 2100 if current trends hold. Related Articles China Stealth Fighter Rival to US F-35 Seen in Sky, Images Appear to ShowIran Gets Significant Diplomatic BoostUS Ally Gives Military Shootdown Authorization Against Chinese DronesUS Ally Plans Naval Power Increase Amid China Threat on Disputed Territory 2025 NEWSWEEK DIGITAL LLC.
Newsweek
07-07-2025
- Business
- Newsweek
China's New Cash Plan to Tackle Birth Rate Threat
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. China plans to introduce new nationwide cash incentives for families with newborn babies in an effort to boost the country's declining birth rate and ensure long-term economic growth. Newsweek reached out to the Chinese Foreign Ministry via email for comment. Why It Matters China ended its decades-long one-child policy in 2016, but the country's fertility rate continued to decline for seven years, despite a raft of government policies. Officials fear that the demographic shift could have wide-ranging effects on the world's second-largest economy in the years to come. While the fertility rate last year bucked the trend, ticking upward to 1.2 births per woman from 1.0 in 2023, this was still well below the replacement rate of 2.1. Meanwhile, the population shrank for a third year, raising official concerns about the impact of these demographic shifts on China's economy and global position. What To Know Under a new nationwide policy, central authorities will offer families a cash allowance of 3,600 yuan (about $500 USD) per year for each child born on or after January 1, 2025, Bloomberg reported, citing people familiar with the matter. Payments will continue until the eligible child reaches the age of three. This builds on previously announced local cash subsidies, though these have primarily targeted couples having their second or third child. While these efforts have generally failed to boost birth rates, one notable exception is the Hubei province city of Tianmen, where incentives were followed by a notable surge in births last year. Other measures have included subsidizing in vitro fertilization and providing child care subsidies. Last month, officials announced that all tertiary-level hospitals would be required to provide epidural anesthesia during childbirth, aiming to make the experience less stressful and encourage higher fertility. The policy follows a pledge by China's No. 2 official, Premier Li Qiang, to introduce additional child care subsidies, although he did not provide details. Experts have pointed to a range of factors behind the demographic decline, from gender discrimination in the workplace to the high cost of education. A young mother pushes a stroller while watching kites shaped like jellyfish soaring in the sky over Chongqing, China, on November 12, 2024. A young mother pushes a stroller while watching kites shaped like jellyfish soaring in the sky over Chongqing, China, on November 12, People Are Saying Michelle Lam, a Greater China economist at French banking group Societe Generale, told Bloomberg: "[Central government subsidies are a] tiny but signals a change in mindset and paves the way for more stimulus to come. It's a move in the right direction." He Yafu, an independent demographer, wrote on the Chinese social media platform WeChat in January: "Tianmen's case proves that cash incentives are making a childbearing subsidies have no effect, it is because they are too small and need to be increased." What Happens Next It remains to be seen whether the nationwide cash subsidies or other recent measures will be enough to offset the economic and cultural forces driving China's declining birth rate. The United Nations has projected that China's population—currently about 1.4 billion—could shrink to under 800 million by 2100 if current trends hold.
Time of India
04-07-2025
- Business
- Time of India
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. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Walmart Cameras Captured These Hilarious 20 Photos Undo 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. Live Events 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.'
Yahoo
30-06-2025
- Business
- Yahoo
China's Stimulus Outlook Clouded by Surprise Economic Strength
(Bloomberg) -- China's economy surprised with signs of improvement even as deflationary pressures persisted and employment weakened, throwing fresh doubt over the likelihood of further monetary stimulus by Beijing in the face of higher US tariffs. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sao Paulo Pushes Out Favela Residents, Drug Users to Revive Its City Center Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown Factory activity and construction had their strongest month of the second quarter in June, according to China's official purchasing managers' indexes released on Monday. The official manufacturing PMI remained in contraction but reached 49.7 from 49.5 in May — exceeding forecasts along with a measure of construction and services. Yet behind the headline figures was a more mixed picture of the world's second-biggest economy that left the market unsure of if and when policymakers might step up stimulus efforts. Traders dialed back bets on further monetary easing after the data release, with futures on 30-year government bonds falling as much as 0.6% — the most in a month. 'Overall, the better PMI data point to still decent momentum in the second quarter,' said Michelle Lam, Greater China economist at Societe Generale SA. 'But the weak employment indices put the sustainability of consumption recovery in doubt without more support later in the year.' A tariff truce with the US has led to a rebound in trade, contributing to a broad improvement in new orders for factories, builders and service providers. The latest PMI reading captured the first full month after Beijing and Washington agreed to a 90-day pause in their trade war. At the same time, sales prices are continuing to drop despite narrowing their decline across the sectors. What's more, manufacturing employment weakened, illustrating the weakness of domestic demand and the vulnerabilities still lurking in the labor market. What Bloomberg Economics Says ... 'Further employment shrinkage and the weakest confidence since the government's growth pivot last September highlight the lack of confidence beyond the immediate future. That's likely due to the mid-August expiration of the China-US trade truce. The government has continued to support the economy, as seen the acceleration in construction, but may hold back fresh stimulus until the latter part of 3Q.' — Chang Shu and David Qu. Click here to read the full report. With the People's Bank of China issuing a more optimistic assessment of the economy after its latest policy meeting, analysts are debating whether authorities will roll out fresh measures in support of growth in the coming three months. Some argue the urgency has decreased in the near term, as the pace of expansion stays on track to hit the official target of around 5% in the second quarter. Among factories, the new orders index expanded for the first time in three months, though a gauge of employment worsened again after a slight improvement in May. Among the 21 industries surveyed, more than half were in expansion territory, according to the National Bureau of Statistics. The Chinese economy has held up well over the past three months as it went through a rollercoaster ride of erratic decisions by President Donald Trump, who would hike tariffs only to have them suspended later. Exports kept growing, however, as overseas clients front-loaded orders, while a government subsidy program for consumer products pushed retail sales growth to the fastest since 2023. The Chinese government's earlier issuance of bonds this year also supported robust infrastructure investment and construction. Persistent deflation and weak consumer demand have shadowed the economy throughout the trade war. Property prices are struggling to bottom out, weighing on household wealth and confidence. The economic cross-currents are likely to complicate policymaking in the months ahead. The PBOC highlighted the recent improvement in its statement on Friday while also drawing attention to problems including insufficient demand and low consumer prices. The central bank vowed to use a flexible approach when deciding the pace of policies. It last cut interest rates and the reserve requirement ratio — which determines the amount of cash banks must set in reserves — in May. 'The economy shows a positive trend, and social confidence continues to increase,' the PBOC said. The central bank's view indicates 'a less dovish tone' compared with the previous quarterly meeting and 'signals limited appetite for significant easing in the near term,' Goldman Sachs Group Inc. economists wrote in a note on Saturday. They expect a 10-basis point policy rate cut and a reduction of half a percentage point in the RRR during the fourth quarter, when they anticipate a significant slowdown in economic growth. Others argue that the PBOC may ease monetary policy as soon as next quarter in order to ensure the economy stays on the right track. 'Policymakers might recognize that to sustain the growth momentum and counter subdued price levels, some modest easing might be needed,' said Jacqueline Rong, chief China economist at BNP Paribas, who expects the PBOC to cut the policy rate by 10 basis points in August. Societe Generale's Lam sees a possible window for additional stimulus in late third quarter, though it could be delayed to the subsequent three months. Apart from monetary easing, China could also make use of policy banks to inject new money for infrastructure. Authorities planned to let them raise 500 billion yuan ($70 billion) of capital to buy stakes in infrastructure projects, Bloomberg News reported in May. Additional fiscal stimulus is another possibility, though its shape is even less clear and will likely require a significant slowdown in growth. Economists at Morgan Stanley said Beijing may introduce 'a modest' supplementary fiscal infusion of up to 1 trillion yuan in the late third quarter or the start of the last three months of the year, 'when it sees two-three months of weaker hard data.' The strength of Chinese manufacturing in the rest of the year also remains in question given an unpredictable outlook for exports, with a more lasting trade deal still elusive. Economists surveyed by Bloomberg expect gross domestic product to expand 4.5% this year, significantly below the official target of around 5%. 'The question for policymakers are deflation and joblessness instead of growth,' said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. . 'I am not worried about China's GDP.' --With assistance from James Mayger and Wenjin Lv. (Updates throughouot.) America's Top Consumer-Sentiment Economist Is Worried How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Apple Test-Drives Big-Screen Movie Strategy With F1 Does a Mamdani Victory and Bezos Blowback Mean Billionaires Beware? ©2025 Bloomberg L.P.
