HONG KONG, Jan 16 (Reuters) – China’s population policy is emerging as a key part of its economic strategy as Beijing rolls out its most wide-ranging push to boost a flagging birth rate, with official population data due on January 19 set to show a fourth consecutive annual drop.
Beijing is looking at a total potential cost of around 180 billion yuan ($25.8 billion) in 2026 to boost births, according to Reuters estimates, as authorities grapple to undo decades of strict population control that helped tackle poverty but reshaped Chinese families.
The estimate includes the cost of the national child subsidy, which was introduced for the first time last year, as well as expected insurance payments. The government pledged that women in 2026 would have “no out-of-pocket expenses” during their pregnancy, with all medical costs, including in vitro fertilisation (IVF), fully reimbursable under its national medical insurance fund.
China’s finance ministry did not immediately respond to a Reuters request for comment on the figure, which was in line with economists’ estimates.
China’s population has been shrinking since 2022 and is ageing rapidly, complicating Beijing’s plan to boost domestic consumption and rein in debt, with hundreds of millions of people set to leave the workforce at a time when pension budgets are already stretched.
Demographers and economists argue that fewer children today could mean fewer households and slower consumption growth over time.
POLICIES LIKELY TO HAVE LIMITED EFFECT
Despite the increased spending, demographers said the new measures were unlikely to produce a major rebound in births.
The initiatives “may have some effect, but their impact is likely to be limited. Low fertility is a widespread challenge across East Asia,” said Xiujian Peng, senior research fellow at the Centre of Policy Studies at Victoria University in Australia.
China has one of the lowest fertility rates in the world at around 1 birth per woman, well below the 2.1 rate needed for a population to remain stable, and is likely to decline further, demographers say. Other East Asian economies including Taiwan, South Korea and Singapore have similarly low levels of fertility at around 1.1 births per woman.
The number of Chinese women of reproductive age, defined by the United Nations as those aged 15 to 49, is set to drop by more than two thirds to under 100 million by the end of the century, according to population projections from the UN.
Peng said Japan, South Korea and Singapore had also invested heavily in pro-natalist policies but had limited success. “This experience suggests there is no quick or simple fix.”
China’s birth-supporting subsidies are broadly in line with Japan’s long-running support for families, but lower than South Korea, which spent around $64.8 billion in 2025 to address its low fertility rate. Neither South Korea nor Japan have seen their birth rate rise materially even with the baby-boosting policies.
‘POSITIVE VIEWS ON MARRIAGE, CHILDBEARING’
Demographers say Beijing also needs to address the high cost of education, help young people to find secure employment and tackle deep-rooted gender constraints.
China’s 15th five-year plan, starting this year, pledges to refine pro-birth policies, including promoting “positive views on marriage and childbearing” and lowering the costs of childbirth, parenting and education through subsidies and personal income tax credits.
A new nationwide childcare allowance introduced in 2025 — the first national benefit aimed at families with young children — pays 3,600 yuan ($500) a year per child under three and is tax-exempt.
With about 30 million children under the age of three, China’s annual subsidies could reach around 108 billion yuan this year. State media say more than 24 million applications have been made so far.
Research group Trivium China estimates the cost of reimbursing women for the costs incurred during pregnancy and childbirth will add up to 70 billion yuan to the government’s medical insurance fund in 2026, about 2% of the fund’s anticipated total payouts.
Trivium said the policy would materially lower the cost of childbirth, modestly reduce financial pressure on young families, and potentially free up household cash for other consumption.
However, for many people in China, having just one child or no child has become the social norm, said Yi Fuxian, a demographer at the University of Wisconsin-Madison, citing China’s one-child policy, in place from 1980 to 2015.
CONTRACEPTIVES NO LONGER TAX-FREE
For decades, contraceptives attracted no tax because the government used them as a key part of its population control measures.
That came to an end on January 1 when a 13% value-added tax was placed on condoms, contraceptive drugs and other forms of birth control.
Demographers say the move, turning contraceptives into a routine consumer product, underlines the government’s new priority is raising rather than limiting births.
Reckitt-owned Durex, a top condom brand in China, declined to comment on the impact, but many users on the RedNote social media platform scorned the measure and said it would not prevent them from buying condoms in future.
“What gives people the confidence to have children has never been the price tag on a condom, but their faith in the future,” said one RedNote user.
($1 = 6.9733 Chinese yuan renminbi)
(Reporting by Farah Master; Editing by Kate Mayberry)
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