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Mandy Zuo

When Tang Tang, a mother from Tianmen in central China, gave birth to her second child in December, it brought her family untold joy – and a thick wad of cash.
Within months of leaving hospital, the local government paid Tang a 6,500-yuan (US$897) reward for having two children as part of a new birth subsidy scheme introduced last year. She will also receive an 800-yuan allowance every month until her new baby turns three.
For a family in Tianmen, where income levels are far lower than in megacities such as Shanghai, the new birth subsidies represent a genuine windfall.
“Your baby was born with her own food,” one user commented under Tang’s post sharing her experience on Douyin, China’s version of TikTok.
China is wagering that these kinds of economic incentives can convince families to have more kids, as it strives to arrest a looming demographic crisis.
The country’s population has been shrinking for three consecutive years, driven mostly by a plunge in the nation’s birth rate. If current trends continue, the population could fall from more than 1.4 billion to less than 800 million by the end of the century, according to the United Nations.
The decline threatens to put the country’s economy under strain, as the working-age population becomes ever smaller and the government’s health, pensions and social care costs soar due to a steep rise in the number of retirees.


For Chinese authorities, boosting the birth rate has therefore become a top priority – and birth subsidies have rapidly emerged as one of the main tools officials are using to achieve this.
A slew of localities – including Tianmen – have introduced their own payments over the past couple of years. Now, they are set to become universal as the central government moves towards broader financial incentives for raising children.
Earlier this month, Premier Li Qiang proposed the introduction of a national childcare subsidy during his government work report to China’s National People’s Congress. The National Health Commission has since confirmed it is working to draft detailed plans for the policy, as well as conducting further research into other potential fertility support measures.
Yet, even before the scale and scope of the subsidy has been announced, debate is swirling in China about the effectiveness of the policy. Can financial incentives truly influence birth rates? And if so, how large must they be to make a real difference?
There is some cause for hope. While research findings are mixed, most studies – both domestic and international – suggest that direct financial support can boost fertility rates to some degree.
Tang’s hometown of Tianmen has provided an early example of this, propelling the little-known city in Hubei province to national fame.
In January, local officials announced that Tianmen had recorded a 17 per cent uptick in births in 2024 – the first year since the city had introduced subsidies for families giving birth to a second or third child.
The increase was far greater than the modest 5.5 per cent bump in the number of newborns recorded nationwide last year, sparking hope that cities across China might be able to achieve similar results by copying Tianmen’s policies.
If the population starts to decline rapidly, businesses will hesitate to invest. If businesses hold back on investment, job opportunities shrink
Huang Wenzheng, demographer
Meanwhile, a study by demographer Huang Wenzheng indicated the city’s policies may indeed be replicable elsewhere. Huang found that Tianmen’s investment in birth subsidies – which accounted for 0.87 per cent of the city’s total economic output – had contributed to a 0.1 percentage point rise in the local fertility rate.
The outcome aligns with global trends, with every 1 per cent of gross domestic product invested in birth incentives typically resulting in a 0.1-percentage-point increase in fertility rates on average, said Huang, who heads the YuWa Population Research Institute, a Beijing-based private think tank focused on demographic and public policy analysis.
However, Huang cautioned that even if Tianmen-style subsidies were rolled out across China, it would still be insufficient to truly change the country’s demographic trajectory.
If China were to replicate Tianmen’s birth subsidies nationwide, it would cost the country about 150 billion yuan (US$20.7 billion), according to an estimate by Song Xuetao, chief economist at Sinolink Securities.
But the government would actually need to invest 30 to 50 times that amount to raise China’s fertility rate from its estimated current rate of 1.0 to the replacement level of 2.1, according to Huang.
The fertility rate is the average number of babies born to each woman. A rate of 2.1 children per woman is the minimum level required for a country’s population to remain constant.
China’s birth rate has fallen precipitously over the past few decades, driven by a combination of factors including rising living standards, changing social values, a lack of affordable childcare options, and the government’s strict one-child policy.
Though Beijing phased out the one-child policy in 2016 and has since begun actively encouraging families to have three children, the nation’s fertility rate is still trending downwards.
In Shanghai, one of China’s wealthiest cities, the rate slipped to as low as 0.6 in 2023.
That was also the year China’s population began shrinking for the first time in six decades – a trend that has worrying implications for the country’s long-term economic prospects.


“If the population starts to decline rapidly, businesses will hesitate to invest. If businesses hold back on investment, job opportunities shrink, making the labour market more difficult to navigate,” Huang explained.
Huang likened the situation to a subway train arriving at a busy station. “If half the passengers suddenly leave, those remaining might feel more comfortable, hoping that every station is this empty. But they forget that if there aren’t enough people, the subway system itself won’t be sustainable.”
In a bid to stave off such a crisis, Hohhot, the capital of Inner Mongolia in northern China, announced record-high birth incentives this month – 10,000 yuan for a first child, 50,000 yuan for a second and 100,000 yuan for a third.
Given the city’s per capita disposable income level was less than 50,000 yuan in 2024, the subsidies are among the most generous in China.
Qin Na, a mother of two in Hohhot, believes the policy will influence many local families’ decisions.
“Incomes here aren’t high, and housing is affordable,” she said. “A family can live comfortably on a 6,000-yuan [monthly] salary even if one parent stays home with the kids.”
However, Qin remains hesitant about having a third child herself. “Maybe it’s because the one-child policy was so deeply ingrained. I just can’t imagine raising three children,” she said.
While financial incentives may not directly make families choose to have more children, they do help alleviate economic burdens, making childbearing a viable option for those who would otherwise hesitate, studies show.


A recent online survey of more than 144,000 parents who already had a young child by a research team in eastern China found that only about 15 per cent planned to have more children.
But after the researchers informed the respondents about a planned 1,000-yuan government subsidy, the proportion of parents planning to have more kids rose by 8.5 percentage points, according to the study, which was published in the reproductive medicine journal Human Reproduction Open in September.
The effectiveness of birth incentives is also evident in other countries.
In South Korea, the health and welfare ministry announced a sharp increase in subsidies in January 2024, with parents of children under one year old receiving 1 million won (US$682) per month and those with children aged between one and two getting 500,000 won.
A year later, government data showed that births had risen 3.1 per cent year on year in South Korea in 2024 – the first uptick the nation had recorded in nine years.
However, Japan’s experience suggests that non-monetary support may be equally, if not more, important.
The expansion of childcare facilities in Japan since 2005 has led to an increase in the total fertility rate by 0.1, according to a report by the International Monetary Fund published in May last year.
Sissi Xi, a mother of two kids who lives near the French-German border, echoed this sentiment, pointing out that in Germany the shortage of day care slots is a major concern for local families.
“Many people apply for day care years in advance – sometimes two, three or even four years ahead,” Xi said. “They wait until they secure a spot before deciding to have a baby.”
I’m OK with raising my child in a thrifty way, so this subsidy definitely makes a difference
Tang Tang, Tianmen mother
Chinese policymakers appear to be aware of this issue.
In addition to subsidies, the government is also emphasising broader efforts to create a family-friendly environment, pushing forward policies such as expanding affordable childcare services and providing more public preschool places.
Last week, Zhejiang province in eastern China said it would encourage local officials to distribute marriage vouchers and childcare coupons alongside birth subsidies.
Meanwhile, labour market conditions are showing signs of change. Last week, China’s central government vowed to crack down on excessive overtime as part of a wide-ranging action plan to boost consumption.
Several major tech companies that are notorious for their overtime culture, including leading drone maker DJI, have also pledged to reduce their staff’s working hours.
But for Tang, the Tianmen mother, cash incentives are the only thing that really matters. “I’m OK with raising my child in a thrifty way, so this subsidy definitely makes a difference,” she said.


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Why China is betting on birth subsidies to solve its population crisis

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China is betting big on birth subsidies to stave off a demographic crisis. But do cash payments really work?

China is betting big on birth subsidies to stave off a demographic crisis. But do cash payments really work?