A national childcare subsidy for children under the age of three, has been announced by China.

It is the most significant central-level effort to reverse a deepening demographic crisis since allowing families to have three children in a country where the fertility rate has now dropped to half of what is needed to keep a population from declining.

The country will provide an annual subsidy of 3,600 yuan (€435) for every child born on or after January 1, 2025, until they turn three – regardless of whether they are the first, second or third child, according to a government announcement on Monday.

“The policy does mark a major milestone in terms of direct handouts to households and could lay the groundwork for more fiscal transfers in future,” said Huang Zichun, China economist at Capital Economics.

But he also pointed out that the sums involved were too small to have a near-term impact on the birth rate or household consumption.

The country is also among the world’s most expensive places to have children, in relative terms, according to a study by China-based YuWa Population Research Institute.

Moreover, decades of strict one-child policy enforcement not only curbed births but deeply affected social attitudes and the confidence to have children.