China Launches Inaugural Childcare Subsidy Scheme

The pioneering subsidy targets families with young children and marks an historic step toward demographic reform.

HR Policy Global Perspective: Officials and analysts identify this as a major policy shift—marking a commitment to family support and broader efforts to create a childbearing-friendly society amidst China’s demographic decline.  However, experts caution that while the subsidy helps ease short-term costs, it is unlikely to move fertility rates significantly unless paired with comprehensive reforms in childcare infrastructure, maternity leave, and workplace protections for women

The Bigger Picture:

China is facing a sharp demographic decline due to falling birth rates, aging population, shrinking workforce, and delayed family formation.  This is threatening long-term economic growth, social stability, and national development goals.

China has launched its first-ever national childcare subsidy scheme, offering families 3,600 yuan (~US $500) annually for each child under three years old. Launched in mid-July, the subsidy is available retroactively from January 1, 2025, covering eligible children born before 2025. 

The Ministry of Finance has earmarked around 90 billion yuan (~US $12.5 billion) for 2025 to fund these subsidies, with the central government covering approximately 90% of implementation costs. Local governments share the remainder of the costs.

This program is estimated to benefit more than 20 million families and represents the central government’s first direct cash transfer to households aimed at supporting young children 

Outlook for Employers

• Encouraging workforce re-entry: By easing early childrearing costs, subsidies may draw more mothers back to work.
• Addressing talent shortages: This could widen the labour pool, aiding employers in sectors like service, manufacturing, and healthcare.

Setting a supportive policy tone: The national subsidy advocates for family-friendly practices, increasing pressure on employers to offer benefits like paid leave, flexible hours, and on-site childcare.