As part of an ongoing strategy to ease financial burdens for younger families, policymakers are hoping that childcare subsidies, education waivers, and other household assistance measures can help boost domestic demand while simultaneously addressing pressing social needs. However, analysts warn that without broader reforms, many proposals could fall short of their intended impact as concerns over the economy continue to mount.
Back in July, Beijing approved a new childcare subsidy granting an annual allowance of 3,600 yuan per child under the age of three, starting with those born after January this year. Children born between 2022 and 2024 will receive partial assistance.
[See more: Should China take in more immigrants to fix its population woes?]
Besides the amount, the nationwide distribution marks a noticeable shift when compared to earlier schemes that were confined to select provinces, comments Lillian Li, vice president and senior credit officer at Moody’s, in comments sent to Macao News. The credit agency estimates that the new childcare subsidies should save Chinese households approximately 95 billion yuan during the first year, though it gradually declines until 2030.
The tax-exempt stimulus accompanies a raft of existing policies like social security relief, migrant workers assistance, and job placement support for university graduates. Policymakers have also pledged to gradually implement free or reduced preschool education costs, which could save an additional 60 billion yuan annually, according to Morgan Stanley estimates.
Fertility trends in China
China’s economy expanded at a faster than expected 5.2 percent over the second quarter, helped in part by front-loaded industrial activity and a household trade-in scheme that was launched in March 2024.
Alongside welfare and infrastructure spending, the stimulus aims to offset a prolonged property slump and uncertain global outlook but comes at a time when experts warn that any social relief could be blunted by larger structural factors, undermining the effectiveness that authorities are looking for.
While the National Health Commission projects that over 20 million households benefiting annually from the childcare subsidy, Li says that without deeper changes, such as improved parental leave, workplace flexibility, and access to affordable childcare, any intended outcomes may be short-lived and insufficient to drive a sustainable recovery in private consumption given the larger overall costs of raising a family.
[See more: Workplace policies could ease Macao’s birth rate woes, experts say]
In 2024, think-tank YuWa Population Research Institute estimated that the total expenditure to raise a single child until the age of 18 would reach 538,000 yuan. Li adds that while the new childcare subsidies amount to 3 percent of China’s average per capita income, roughly on par with what is offered in Japan, it falls short of the 14 percent allocated in South Korea.
“These reforms are addressing middle to longer term issues,” the Shanghai based analyst shares. But because the desired effect will take time to materialise, meaning the birth of more babies and subsequent spending that comes with it, the government will bear the upfront burden, Li says.
Officials are working to build on a recent uptick in fertility rates. China’s nation’s birth rate rose from 6.39 births per 1,000 people in 2023 to 6.77 in 2024. The total births reached 9.54 million last year, up from 9.02 million, but were still outpaced by deaths, lowering the total population to 1.41 billion.
Macao’s woes and responses
To reverse the city’s declining birth rates, Macao launched a childcare allowance scheme by offering annual payments of 18,000 patacas and extended an existing programme that provides subsidies for women on maternity leave. In 2016, the SAR registered 11 births per 1,000 people. By 2024, the rate had fallen to 5.3, hovering among its lowest levels in thirty-years.
[See more: Macao’s new childcare allowance: Here’s how to apply]
The causes behind low fertility rates are often multifaceted, comments sociologist Emma Zang of Yale University. “Women’s increasing educational attainment makes them very competitive on the labour market,” Zang earlier shared with Macao News, adding that within the East Asian context, socio-economic factors play a significant role.
“As of now, there seems to be no one-size-fits-all solution, very fast, very effective policy that could raise the birth rate to the level that people would want to see,” she said.
