Baby boom puts China to the test

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Baby boom puts China to the test
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Subsidizing young families could be more practical than intervening in the economy

China’s population may have peaked in 2021, much earlier than anticipated, 2030. The authorities are aggressively seeking to reduce the costs of raising a family, by intervening in the housing market or after-school classes, but that may slow growth. Subsidizing young families in the form of cash and tax breaks could be more practical, especially while inflation remains low. After the city of Panzhihua gave parents 69 euros a month for a second or third child, few have followed suit, probably due to financial difficulties.

These incentives will have a marginal impact on young people in China’s biggest cities who shy away from childbearing due to job stress or a newfound sense of independence. But they could be a temporary relief. Russia’s birth rate rose after introducing benefits such as housing subsidies. At least the poor will benefit.

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