Why China's childcare subsidies may benefit poorer regions - and how they stack up in Asia

South China Morning Post

18 hours ago

In a major effort to tackle its deepening
demographic crisis , China has launched a nationwide childcare subsidy scheme – the first of its kind by the central government.
The much-anticipated programme offers families 3,600 yuan (US$501) annually for each child under the age of three, building on similar initiatives already piloted in more than 20 provinces.
In this explainer, the Post looks into the potential impact of the new scheme – and how it compares internationally.
How will the scheme impact different regions?
The subsidy – a
universal benefit without additional qualification requirements – is expected to have a more significant impact in lower-income regions, said Ding Shuang, chief Greater China economist at Standard Chartered Bank.
The difference will be more pronounced in households where the 3,600 yuan handout represents a larger proportion of income, he said.
For instance, in Gansu, one of China's poorest provinces, the subsidy will represent over 13.5 per cent of an average resident's annual income. In contrast, it will make up just 4.1 per cent in Shanghai, which has one of the country's lowest birth rates, according to government data from 2024.
This means less affluent regions, including smaller cities and rural areas, could expect to see a boost in consumption and, to a lesser extent, birth rates.
How much will the subsidies cost the government?