The focus is on optimising the structure of the population to help maintain economic growth and stability Ten years after China formally abandoned its one-child policy, it has unveiled a national childcare subsidy to encourage couples to have children. This is not only to stem a decline in the population but also to address a worrying trend in its structure that could ultimately pose social and economic problems.
The government has announced it will provide an annual subsidy of 3,600 yuan (US$501) for every child born on or after January 1 this year until they turn three, regardless of whether they are the first, second or third child. Last year, births in China rose for the first time since 2017, an uptick partly attributed to the auspicious Year of the Dragon in the Chinese zodiac.
This year, China's population will slip below 1.4 billion people. While some may argue that, given its natural resources, the country could do with a smaller population, the effect of ageing and shrinking of the workforce on the structural population balance in the future has become a worry for policymakers. It has given rise to concerns about a "super-aged" society comparable demographically with Japan, where nearly 30 per cent of people are over 65.
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The key to sustainable population planning now is not to reverse the population trend but to optimise the structure to help maintain economic growth and stability.
A related issue is the need for China to boost domestic economic consumption. One of the reasons that Chinese consumers are not spending more - including on having more children - is because of the state of the social welfare system. Many families still have to save their disposable income for elderly and child care and medical expenses.
More than 20 provinces across China have already experimented with childcare subsidies at various local levels, but this marks the first nationwide scheme introduced by the central government.
The government realises that sustainable growth depends on greater focus on domestic consumption. To encourage a better balance, it must spend more on social welfare. The childcare subsidy is a first step. We may see more in the next five-year plan from 2026.
Last month, President Xi Jinping chaired the Central Urban Work Conference, the first top-level urban planning meeting in a decade, reflecting the need for change from rapid urban growth to stable development, including more attention to the need for social and public services.
The childcare subsidy is not a one-off measure to relieve the pressure on Chinese couples to save rather than spend. It could be the first of several other family-friendly policies and measures designed to optimise the structure of the world's second-largest population.
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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