HONG KONG, Jan 16 (Reuters) – China’s population policy is emerging as a key part of its economic strategy as Beijing leads its broadest push yet to boost its declining birthrate, with official population data due on Jan. 19 set to show a fourth straight annual decline.
Beijing is looking at a total potential cost of about 180 billion yuan ($25.8 billion) in 2026 to boost births, according to Reuters estimates, as authorities struggle to lift decades of strict population control that has helped tackle poverty but reshaped Chinese families.
The estimate includes the cost of the national child benefit, which was introduced for the first time last year, as well as expected insurance payments. The government has promised that women in 2026 will have “no out-of-pocket costs” during their pregnancy, with all medical costs, including in vitro fertilization (IVF), fully reimbursed 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 aging rapidly, complicating Beijing’s plan to boost domestic consumption and curb debt, with hundreds of millions of people poised to leave the workforce at a time when pension budgets are already stretched.
Demographers and economists argue that fewer children today could mean fewer families and slower growth in consumption over time.
POLICY LIKELY TO HAVE LIMITED EFFECT
Despite the increased spending, demographers said the new measures are 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, a senior researcher at the Center for Policy Studies at the University of Victoria in Australia.
China has one of the lowest fertility rates in the world at about one birth per woman, well below the 2.1 rate needed to keep a population stable, and is likely to decline further, demographers say. Other East Asian economies including Taiwan, South Korea and Singapore have similarly low fertility levels of 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 expected to drop by more than two-thirds to below 100 million by the end of the century, according to UN population projections.
Peng said Japan, South Korea and Singapore have also invested heavily in pro-natalist policies but had limited success. “This experience suggests that there is no quick or simple solution.”
China’s subsidies for birth support are broadly in line with Japan’s long-term support for families, but less than South Korea, which has spent about $64.8 billion in 2025 to address its low fertility rate. Neither South Korea nor Japan have seen their birth rates rise materially even with baby-boosting policies.
‘POSITIVE VIEWS ABOUT MARRIAGE, MARRIAGE’
Demographers say Beijing also needs to address the high cost of education, help young people find secure jobs and address deep gender constraints.
China’s 15th five-year plan, which starts this year, promises to refine pro-birth policies, including promoting “positive views on marriage and childbirth” and reducing the costs of birth, upbringing 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 for each child under three and is tax-exempt.
With about 30 million children under the age of three, China’s annual subsidies could reach about 108 billion yuan this year. State media say more than 24 million applications have been made so far.
Research group Trivium China estimates that the cost of reimbursing women for expenses 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 payments.
Trivium said the policy would materially reduce the cost of childbirth, modestly reduce the financial pressure on young families, and potentially free up household cash for other consumption.
However, for many people in China, having only one child or no children has become the social norm, said Yi Fuxian, a demographer at the University of Wisconsin-Madison, citing China’s one-child policy, in effect from 1980 to 2015.
CONTRACEPTIVES ARE NO LONGER TAX FREE
For decades, contraceptives did not attract any tax because the government used them as a key part of its population control measures.
This came to an end on 1 January when a 13% value added tax was placed on condoms, contraceptives and other forms of birth control.
Demographers say the move, which turns contraceptives into a routine consumer product, underlines the government’s new priority is raising rather than limiting births.
Durex, owned by Reckitt, China’s top condom brand, declined to comment on the impact, but many users on social media platform RedNote decried the measure, saying it would not prevent them from buying condoms in the future.
“What gives people the confidence to have children has never been the price on a condom, but their faith in the future,” said one RedNote user.
($1 = 6.9733 renminbi Chinese yuan)
(Reporting by Farah Master; Editing by Kate Mayberry)