Customers will browse children’s clothing at Chungin wholesale stores in China on March 1, 2025.
Chen Sing | Getty Images News | Getty Images
Beijing – Childcare subsidies are being subsidized among the top priorities China has laid out to promote consumption.
It is an effort to tackle the rapid decline in the country’s births while releasing cash for discretionary spending.
Like many Chinese policies, the plan released on Sunday only presents the framework: “Strengthen support for childbirth and raising children. Research and establish systems for subsidizing childcare.” It was translated by Chinese CNBC.
However, Beijing is moving relatively quickly.
The National Health Commission has already drafted an operational plan to subsidize childcare, the Deputy Director of Economic Planners, Li Chunlin, the National Development and Reform Commission, told reporters on Monday.
Jianguang Shen, chief economist at Chinese e-commerce company JD.com, said Mandarin, translated by CNBC, could soon have a nationally-level policy ($13.84 billion) for child care subsidies of 100 billion yuan ($13.84 billion) soon.
This is based on a monthly handout of around 9 million birth rates this year and around 800 yuan yuan of monthly handouts to parents, regardless of their income, Shen said. He pointed out that half of the cash can come in the form of baby products vouchers to prevent families from saving money.
China has recorded 9.54 million births since last year, an increase of 520,000 from the previous year. Many locals came up with auspicious year of birth based on the year of the Chinese constellations, Dragon. However, World Bank data showed that in 2022, the birth rate defined as birth per woman was 1.8 to 1.2 in 2012 in China.
“The key is to increase financial resources,” Shen said. In the context of a subsidy of 300 billion yuan, 100 billion yuan for childcare cannot be so demanded. He forecasts growth of around 3.5% to 4.5% of retail sales this year.
China’s retail sales rose modest 3.5% last year, according to official data. The January-February period covering New Year’s holidays in the month of the New Year saw a slight pick of 4% year-on-year, the Bureau of Statistics said on Monday.
How much is it?
A glimpse into what’s already unfolding, last week the inner capital of Mongolian capital Hohhot announced a grant of up to 100,000 yuan for registered local children living and working in the city.
Couples can enjoy a one-time grant of 10,000 yuan at the birth of their first child. Their second child is eligible for 10,000 yuan in annual grants up to age 5. If a couple have a third child, the city will provide 10,000 yuan per year until the child is 10 years old.
This month’s Deep Shenzhen Technology Hub said it is considering small subsidies. State media said data from the National Health Commission as of October showed that several local governments in more than 20 states already provided some child care subsidies.
“If Hohhot’s childcare subsidies can be extended nationwide, it could be 0.2% of first year retail sales,” Citi analysts said in a report Tuesday. They said subsidies are most meaningful for low-income families and “may become more important if the central government intervenes to share the burden.”
“We don’t know if it will be effective in increasing fertility in the long term,” City analyst said. The total cost of raising a child in China is reportedly about 538,000 yuan.
The per capita disposable income of rural residents was 23,119 yuan in 2024, but official figures show that urban residents’ income was more than doubled, at 54,188 yuan.
Short-term child care subsidies could significantly ease financial pressures among Chinese households.
When Beijing resident Jingli (now 41), gave birth to her daughter nearly a decade ago, there was no childcare support. Song said she made 8,000 yuan a month at the time, and the daycare cost 4,000 yuan.
“We had no choice,” she said. My husband said, “I had to go to work, I had to go to work, my in-laws couldn’t take care of her.”
By the time her daughter was in kindergarten, she said she could benefit from relatively new policies. She said the new parenting policy is “good to the point.” “The only sympathy [is] It’s too late for us, born in the 1980s. Hopefully, younger generations can benefit from these policies. ”
What to see next
China’s efforts to promote consumption also include calls to resolve lower minimum wages, stabilizing the stock market, increasing farmers’ income and late payments for businesses.
“Direction of [China’s] “The consumption increase measures are correct,” an analyst at Goldman Sachs said in a report Monday.
“The announcement of the national childcare subsidies and the Politburo meeting in April are key to seeing in the coming months,” analysts said they were referring to the high-level policy meeting held in late April.
