China is tackling weak consumption with child care subsidies

cnbc.com:

BEIJING — Among the top five priorities China has laid out for boosting consumption is child care subsidies.

It's an effort to tackle the country's rapid drop in births, while freeing up cash for discretionary spending.

As with many Chinese policies, the plan released Sunday only lays out a framework: «Strengthen support for childbirth and raising children. Research and establish a system for subsidizing child care.» That's according to a CNBC translation of the Chinese.

Beijing is moving relatively quickly, however.

The National Health Commission is already drafting an operational plan for subsidizing child care, Li Chunlin, deputy director of the economic planner, the National Development and Reform Commission, told reporters Monday.

A national-level policy of 100 billion yuan ($13.84 billion) for child care subsidies could come soon this year, Jianguang Shen, chief economist at Chinese e-commerce company JD.com, said in Mandarin, translated by CNBC.

That's based on his estimate of around 9 million births this year, and monthly handouts of around 800 yuan to parents, regardless of income, Shen said. He noted half of the cash could come in the form of vouchers for baby products to prevent households from saving the money.

China recorded 9.54 million births last year, up by 520,000 from the prior year, as many locals considered 2024 an auspicious year for births based on the Chinese zodiac's year of the Dragon. However, World Bank data showed that the fertility rate, defined as births per woman, was 1.2 in China in 2022, down from 1.8 in 2012.

«The key is to increase fiscal resources,» Shen said, noting that in the context of 300 billion yuan for trade-in subsidies, 100 billion yuan for child care isn't too much to ask