Can subsidies boost birth rate?

China’s population was 1.41 billion at the end of 2022, down 850,000 from the previous year, with a natural population growth rate of -0.60 per thousand, according to the National Bureau of Statistics.

This is the first time since 1962 that the country’s population has seen negative growth and therefore a major demographic turning point for China as it bids farewell to continuous population growth.

The negative population growth can be attributed to China’s low total fertility rate. The total fertility rate, according to the seventh national census, had dropped to 1.3 by the end of 2020. And according to estimates, it dropped further to 1.12 in 2021.

Since the total fertility rate has fallen below the replacement rate, the Chinese authorities have made boosting the fertility rate a top priority. But the fact that couples are reluctant to have a second child — with some deciding not to have any kids at all — due to high child-raising (particularly education) costs has made the authorities’ task all the more difficult.

Now that China has entered the era of low fertility, the authorities need to create an “ethical community of reproductive responsibility”, take social welfare measures targeted at helping families with young children, and reduce the child-raising costs including the cost if education, in order to encourage young couples to have two or three children. In fact, quite a number of governments around the world today bear part of the maternity and child-raising costs to ease the monetary burden on couples and help stop the continued decline of the birth rate.

In China, cities such as Panzhihua in Sichuan province and Changsha in Hunan province have already introduced childcare subsidy. And Jinan, Shandong province, has announced that couples will get childcare subsidy of 600 yuan ($88.45) per month for every child born after Jan 1, 2023.

Shenzhen, too, plans to introduce childcare subsidies in a differentiated and progressive manner, with the cumulative subsidy for the first, second and third child being 7,500 yuan, 11,000 yuan and 19,000 yuan respectively. A precondition is that at least one of the parents has to have a Shenzhen hukou (household registration). As for the child, it will receive the subsidy till it reaches the age of three.

However, these nominal subsidies will have a limited effect on the birth rate because the subsidy amount eligible families get is like a drop in a bucket.

The cost of living and childcare in first-tier cities such as Shenzhen is extremely high, and the intensive childcare care model is becoming increasingly popular. The Shenzhen municipal government, for example, plans to pay only a small amount as subsidy, which can neither help increase the birth rate nor reduce the burden of couples with two or three children. Yet the Shenzhen government is reluctant to increase the subsidy amount.

Besides, there is no consensus on the necessity and urgency to build a welfare-friendly society where children’s needs especially education, are well taken care of, so as to safeguard national security. As a result, it will be even more difficult for China to emerge out of the low birth trap.

In this context, President Xi Jinping’s assertion that “the people are the country” gains special significance.

To optimize the family planning policy and help boost the fertility rate, China should not only give subsidies to couples but also extend the subsidy period. Also, to ensure all children get good education without increasing the burden on their parents, the authorities should extend the paid maternity/parental leave period, improve childcare services, and better protect women’s right to employment.

The decline in the fertility rate is a matter of serious concern. A 2021 National Health Commission survey showed the willingness of women of childbearing age to give birth continues to decline. Women on average want to have 1.64 kids — down from 1.76 in 2017 and 1.73 in 2019. Of bigger concern is the fact that people born in the 1990s and 2000s, that is, the relatively young demographic group, plan to have only 1.54 and 1.48 children respectively.

In other words, without the restoration of pro-fertility culture in the country, checking the late marriage trend and curbing the rising divorce rate, sustainable population development is not possible.

The author is a professor of demography at the Institute of Population Research of Peking University.

The views don’t necessarily represent those of China Daily.