At the age of nine, Zane Li’s life in a small town in eastern China took a turn when his mother gave birth to a younger sister. However, the arrival of his sister plunged the family into heavy debt due to the strict one-child policy enforced by the Chinese government at the time. Li’s parents faced a fine of 100,000 RMB (approximately $13,900 USD) for having a second child, nearly three times their annual income from selling fish in the local market.
“We could barely survive,” Li recalled to CNN. As a third-grade elementary school student back then, he was forced to mature overnight, taking on most household chores and helping his mother manage a stall during school holidays.
Now 25, Li has no plans to have children – a sentiment increasingly common among his generation, posing a demographic challenge for the Chinese government.
For decades, Chinese officials have employed high fines, forced abortions, and sterilizations to limit couples to fewer children. Yet now, they are urging Li’s generation to have more children.
Although the one-child policy ended before 2016, China’s population has been declining for three consecutive years. The birth rate in 2024 stood at 9.5 million, only half of the peak in 2017 at 17.9 million, with 10.9 million deaths recorded in the same year.
Last week, the Chinese government announced a new measure to boost the persistently low birth rate by providing an annual subsidy of 3,600 RMB (about $500) per child under the age of three to parents, retroactively effective from January 1, 2019.
However, for many young people like Li, this subsidy seems inadequate. “The cost of raising a child is enormous; 3,600 RMB per year is just a drop in the bucket,” Li told CNN. He has sought student loans to pursue a master’s degree in healthcare services in Beijing.
Liu Wen, a 28-year-old market analyst from Hangzhou, also told Barron’s, “The cost of raising children here goes beyond diapers and formula; it includes schooling, housing, and our own careers. Subsidies cannot solve these issues.”
According to a recent study from the Beijing Yuhai Population Research Institute, raising a child in China until the age of 18 costs an average of 538,000 RMB, over six times the country’s per capita GDP, making China one of the regions with the highest relative cost of child-rearing globally.
In Shanghai, the cost of childbirth soars to over 1 million RMB, followed closely by Beijing at 936,000 RMB.
“Having children will only bring more difficulties. I’m not a capitalist; my child may not have a good life either,” Li said. He expressed anxiety over his job prospects and is considering pursuing a Ph.D. to alleviate his concerns.
Facing labor shortages and rapid population aging, China abolished the one-child policy in 2016, allowing couples to have two children and further expanding the policy to three children in 2021. However, the birth rate continues to decline. Despite a slight increase in birth numbers last year, the population has been decreasing for three consecutive years, with experts warning that the decline may be more significant than officially announced.
Currently, the Chinese government is implementing a nationwide standardized plan, allocating 90 billion RMB (about $12.54 billion) to subsidies this year in an effort to address the declining birth rates.
However, with a slowing economy and soaring youth unemployment rates, people are extremely pessimistic about the prospects of becoming parents. The government faces challenges in incentivizing childbirth with monetary rewards.
“This is no longer just a local experiment. This shows that the government views the childbirth crisis as an urgent and nationwide issue,” said Emma Zang, a population demographer and sociology professor at Yale University, in an interview with CNN.
This new plan also offers partial subsidies for children born before 2025, but Zang believes it is unlikely to have a significant impact on birth rates. She added that similar policies in other East Asian countries like Japan and South Korea have largely failed to boost birth rates.
For many young Chinese struggling with high housing prices, long working hours, and an unstable job market, the subsidies fail to alleviate their deep-seated anxieties about parenthood.
This sentiment is particularly pronounced in major cities, where professional pressures and high living costs intertwine. “I’m still working hard to pay off my student loans and save for a down payment,” said Zhang Rui, a 32-year-old software engineer in Shanghai. “I don’t have the time to think about having children now.”
“It’s not just about cost. Many young people are filled with uncertainties about the future, such as job security, aging parents, social pressure, etc., so cash subsidies cannot alleviate the psychological pressures people face today,” Zang told CNN.
For investors, the implications of declining birth rates reach far beyond demographic shifts. Persistent declines in birth rates could pressure long-term economic growth, consumer demand, and labor supply, reshaping various sectors from education to housing, healthcare, and insurance.