China has decided to pay parents 3,600 yuan for each child born after 1 January 2025, which is approximately Rs 42k a year. Until the child turns three, the payment will be continued.

China's population is shrinking rapidly. This marks the third year of steady population decrease. In 2024, the number of new births shrank to 9.54 million. This number is half of the original in 2016, when the one-child policy ended. In 50 years, Marriage rates in China have dropped to their lowest.

Local governments have tried to stop the slide with cash and housing aid. Cities like Hohhot in Inner Mongolia now pay 50,000 yuan for a second child and 100,000 yuan for a third. Incomes there remain low. The cash stands out, as reported by SCMP.

According to SCMP, Huang Wenzheng, a demographer, said, “If the population starts to decline rapidly, businesses will hesitate to invest. If businesses hold back on investment, job opportunities shrink, making the labour market more difficult to navigate.”

Compared China’s shrinking population to an empty train, he explained that if half the passengers suddenly leave, the remaining passengers might feel more comfortable, hoping that every station will be empty. But they forget that if there aren’t enough people, the subway system itself won’t be sustainable.

Huang estimates China would need to spend 30 to 50 times more to reach the replacement level of 2.1 children per woman.

The Economic Times states that Studies show the extra cash can tip the scales for some. A recent survey of over 144,000 parents found just 15 per cent wanted more kids. After learning about a possible 1,000-yuan subsidy, that figure rose by 8.5 percentage points.

According to the UN’s demographic modelling, China, which lost its title as the most populous nation to India in 2023, may see its population drop further to 1.3 billion by 2050 and below 800 million by 2100.