China hopes the payments will convince couples to have more children. Parents say that is highly unlikely to happen When Wang Yuyan first heard about China's new national child subsidy, she was happy about receiving some extra support. But the new mother's excitement quickly faded when she realised the money was barely enough to cover the rising cost of baby diapers and milk formula.
The Hangzhou resident said the diapers she buys for her 4-month-old had gone up from 143 yuan (US$19.90) to 158 yuan just in the few weeks since the government announced the new policy in July.
Overall, Wang now spends nearly 4,000 yuan a month on basic necessities for her child - from vaccinations to formula and clothes. In that context, the new subsidy of 3,600 yuan per year for each child under the age of 3 seems like a drop in the ocean.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
"I don't plan on having a second child," she said. "The costs are way too high."
Wang is far from alone in feeling this way. China's new nationwide child subsidy scheme is part of a concerted effort to encourage couples to have more children, as the government strives to raise the birth rate and defuse a ticking demographic time bomb.
But parents and analysts say the current measures - while well-intentioned - are unlikely to change many households' fertility plans. To really move the needle, the government would need to introduce bolder reforms to bring down childcare costs, which are even higher in China than in other parts of the world.
Promoting fertility has become a top policy priority for Beijing in recent years, with the nation's chronically low birth rate contributing to rapid population ageing that threatens to cause deep social and economic problems.
The workforce is shrinking, while the number of over-65s is soaring, driving up labour, health and social care costs. If current trends continue, the country will lose more than half its current population by the end of the century, according to the United Nations.
Facing a crisis, Chinese officials have been ramping up efforts to boost the birth rate. Local authorities have launched a blizzard of measures, offering childcare subsidies, extending marriage and parental leave, and even organising dating events to help single men start families.
This summer, the central government has announced its most ambitious measures yet, with the introduction of the nationwide child subsidy and plans to offer a year of free preschool education for every child.
But analysts say the policies still do not go far enough. While the child subsidy attempts to tackle the rising cost of raising a child, the payments are too small to make a major difference to most families, according to Liu Qian, founder of Wusawa Advisory and former managing director of The Economist Group in Greater China.
A report by the Beijing-based YuWa Population Research Institute last year found that the direct cost of raising a child to the age of 18 in China was about 538,000 yuan - more than six times the country's per capita gross domestic product (GDP).
That makes China one of the most expensive countries in the world to raise children in relative terms, according to the report. In Australia and France, the cost is just over two times the nations' GDP per capita. In the United States and Japan, it is about four times higher.
But even this figure only accounts for the most visible expenses parents face, such as diapers and education. It ignores the "motherhood penalty" - the loss of earnings women experience after they become parents - which can be even higher, Liu said.
These indirect costs, which include difficulties rejoining the workforce, lower pay and reduced career advancement opportunities, are especially pronounced in China, given the country's high female workforce participation rate.
Based on international studies that put the motherhood penalty at about 20 per cent of a woman's lifetime income, Liu estimated that mothers in China lost about 570,000 yuan in potential earnings on average as of 2022 - a figure that is even higher than the direct costs of raising a child.
Wang, the new mother from Hangzhou, said she was already feeling the effects of this penalty, having quit her full-time job after having her baby.
"I miss the financial freedom I had when I was working and could do whatever I wanted," she said, adding that she now earned just a fraction of her previous income through part-time work.
For the 30-year-old, the effects of the motherhood penalty go beyond simple financial losses. It is also about her sense of self as she shoulders most parenting responsibilities, while her husband becomes the family's primary breadwinner.
The loss of financial independence has begun to take a toll on Wang's mental health and left her questioning her decision to have a child - a dilemma that a simple cash subsidy cannot solve.
Many other young women expressed similar feelings, including Shen Danyu, a 26-year-old from Jiaxing in China's eastern Zhejiang province.
"I wouldn't have a child just for 10,000 yuan," she said, referring to the total amount offered by the child subsidy through three annual payments of 3,600 yuan.
"There are many other problems that need to be solved first, like how difficult it is to find a job, age discrimination in the workplace, high housing prices and the stressful education system."
These sentiments reflect an awkward truth: historically, cash subsidies have not proven very effective at increasing national birth rates, according to Stuart Gietel-Basten, director of the Center for Aging Science at the Hong Kong University of Science and Technology (HKUST).
"Money is just one dimension," he said. "Very, very few people would change their reproductive plans for a cash bonus."
A few places have reported an uptick in births after implementing financial incentives, such as South Korea and Tianmen, a city in central China. But Gietel-Basten noted that it was still too early to assess whether the effects would be sustained.
The increases may just be a temporary bump driven by couples bringing forward an already planned birth, he said, since cash subsidies were highly unlikely to change the birth intentions of those who did not want children in the first place.
Yet, although the subsidy scheme is unlikely to meaningfully raise the birth rate, it could still prove to be effective in other ways - such as helping to boost domestic consumption, another key policy priority for Beijing.
The policy is likely to have a greater impact in lower-income areas, where the handout would make a bigger difference to household incomes. In the eastern Anhui province, for example, the subsidy is equivalent to nearly 10 per cent of a local resident's disposable income, compared with just over 5 per cent in neighbouring Zhejiang.
"Three thousand, six hundred yuan a year is already a good amount," said Yao Mengqi, who lives in Bengbu, a third-tier city in Anhui.
Yao, who is newly married, plans to conceive next year, noting that she and her husband have the means to do so. She is thankful for the subsidy, which she said would help her buy a new refrigerator.
"But my having a child has nothing to do with this subsidy," Yao stressed. "Even if there wasn't a subsidy, I was going to have a child anyway."
Gietel-Basten of HKUST noted that the success of the subsidy might not necessarily be measured solely in terms of birth rates. If its purpose is to support families, its effectiveness could also be gauged by metrics like well-being and health.
But he cautioned that to truly raise birth rates, Beijing would need to tackle deeper economic issues, such as unstable employment, inadequate parenting support and the high cost of housing.
"What is required is structural reform - a completely different way of looking at work, family and gender roles, and how these can be better aligned with people's aspirations," Gietel-Basten said.
Wusawa Advisory's Liu echoed this view, especially the need to rebalance gender roles given the number of Chinese women having to shoulder the double burden of a full-time job and primary caregiving responsibilities.
"The low fertility rate is modern Chinese women's silent strike," she said. "A bigger focus should be on getting men more involved in co-parenting, instead of letting women carry the motherhood penalty alone."
More Articles from SCMP
Video of China mum walking ‘calm’ toddler with knife stuck in head to hospital goes viral
Chinese chef in Singapore’s new-age Cantonese cuisine mixes tradition with modernity
Tighter Beijing security ahead of military parade spares no passageway or parcel
Hong Kong must ensure its elderly age with dignity and care
This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.