China’s new child subsidy is popular. But will it actually raise the birth rate?

When Wang Yuyan first heard about China’s new national child subsidy, she was happy about receiving some extra support. But the new mother’s excitement quickly faded when she realised the money was barely enough to cover the rising cost of baby diapers and milk formula.

The Hangzhou resident said the diapers she buys for her 4-month-old had gone up from 143 yuan (US$19.90) to 158 yuan just in the few weeks since the government announced the new policy in July.

Overall, Wang now spends nearly 4,000 yuan a month on basic necessities for her child – from vaccinations to formula and clothes. In that context, the new subsidy of 3,600 yuan per year for each child under the age of 3 seems like a drop in the ocean.

“I don’t plan on having a second child,” she said. “The costs are way too high.”

Wang is far from alone in feeling this way. China’s new nationwide child subsidy scheme is part of a concerted effort to encourage couples to have more children, as the government strives to raise the birth rate and defuse a ticking demographic time bomb.

But parents and analysts say the current measures – while well-intentioned – are unlikely to change many households’ fertility plans. To really move the needle, the government would need to introduce bolder reforms to bring down childcare costs, which are even higher in China than in other parts of the world.