China is placing population policy at the heart of its economic strategy as it prepares to report a fourth consecutive annual population decline, with official data due on January 19 expected to confirm the continuing demographic slide. Beijing is rolling out its most comprehensive pro-birth campaign to date, as policymakers confront the long-term economic risks of a shrinking and rapidly aging population.
Authorities are estimated to be considering total spending of around 180 billion yuan, or $25.8 billion, in 2026 to support childbirth and family formation. The figure reflects the cost of a new national child subsidy introduced last year, along with expanded insurance coverage aimed at eliminating out-of-pocket expenses for pregnancy. Under the plan, all medical costs related to pregnancy and childbirth, including in vitro fertilization, would be fully reimbursed through China’s national medical insurance system. While the Finance Ministry has not publicly commented on the estimate, economists say it broadly aligns with official policy ambitions.
China’s population has been shrinking since 2022, and the pace of aging is accelerating. Hundreds of millions of people are expected to exit the workforce over the coming decades, even as pension systems face mounting strain. Economists warn that fewer births today could translate into fewer households, weaker consumption growth and slower economic momentum over time, complicating Beijing’s efforts to rebalance growth and manage debt.
Despite the scale of the new measures, demographers remain skeptical that the policies will significantly lift birth rates. China’s fertility rate stands at around one birth per woman, far below the 2.1 needed to maintain a stable population, and is expected to decline further. Similar challenges are seen across East Asia, including in Japan, South Korea, Singapore and Taiwan, all of which have fertility rates near or below 1.1 despite years of generous family support policies.
The shrinking pool of potential mothers adds another constraint. According to United Nations projections, the number of Chinese women of reproductive age, defined as those between 15 and 49, is set to fall by more than two thirds to under 100 million by the end of the century. Demographers point to the experiences of Japan and South Korea, which have spent heavily on pro-natalist initiatives with little success, as evidence that there is no simple solution to low fertility.
China’s spending on birth support broadly mirrors Japan’s long-standing family policies but remains well below South Korea’s, which spent nearly $65 billion in 2025 alone to address its demographic crisis. Neither country has managed to reverse declining birth rates, reinforcing doubts about the effectiveness of financial incentives alone.
Beijing has acknowledged that deeper structural issues must also be addressed. High education costs, job insecurity among young people and persistent gender inequalities are widely cited as barriers to family formation. China’s 15th five-year plan, which begins this year, pledges to refine pro-birth policies by promoting more positive attitudes toward marriage and childbearing while reducing the costs of childbirth, parenting and education through subsidies and tax credits.
A nationwide childcare allowance introduced in 2025 marks the first national benefit aimed specifically at families with young children. The program provides 3,600 yuan, or about $500, per year for each child under the age of three, with payments exempt from tax. With an estimated 30 million children in that age group, annual subsidy costs could reach around 108 billion yuan. State media report that more than 24 million applications have already been submitted.
Additional costs are expected to fall on China’s medical insurance system. Research firm Trivium China estimates that reimbursing pregnancy and childbirth expenses could add around 70 billion yuan to insurance fund payouts in 2026, roughly 2% of anticipated total spending. While the policy could ease financial pressure on young families and free up household income for other consumption, analysts say its impact on fertility decisions may be modest.
Social norms shaped by decades of population control policies also remain a powerful force. China’s one-child policy, in place from 1980 to 2015, has left a lasting legacy, with having one child or no children now widely seen as normal. That shift in attitudes may prove harder to reverse than any fiscal incentive.
Symbolically, Beijing has also moved to dismantle remnants of its population control era. From January 1, contraceptives such as condoms and birth control drugs became subject to a 13% value-added tax, ending decades of tax exemptions that had supported efforts to limit births. Demographers say the move underscores a fundamental policy reversal, signaling that the government’s priority is now encouraging, rather than discouraging, childbirth.
Public reaction has been mixed. While officials see the change as aligning consumer behavior with the new pro-birth agenda, many users on Chinese social media dismissed the idea that higher prices for contraceptives would influence family planning decisions. As one widely shared comment put it, confidence in having children depends less on the price of a condom than on faith in the future.
