China Aims to Lower Child Expenses in Effort to Boost Birth Rate

Beijing said it would “strictly regulate” the after-school tutoring sector as part of stepped-up efforts to cut the cost of having children and help raise China’s birth rate.

“Population is key for sustainable economic development,” the Central Committee of China’s ruling Communist party and the State Council said in a joint statement Tuesday. The notice provided some insight into how the May decision to allow all married couples to have three children will be implemented, promising to abolish fines and other punishments such as loss of jobs for civil servants.

The family planning law will need to be revised for the three-child policy to come into effect, the statement said, but didn’t give a time-frame. It also pledged to reduce the costs of childbirth, parenting and education, and also research how to make more childcare services tax-deductible.

China Aims to Lower Child Expenses in Effort to Boost Birth Rate

Demographers and Chinese parents have said that such costs, rather than birth restrictions, are now the main cause of declining birth rates in China.

The statement did not give details of the measures planned against online tutoring services, some of which are backed by Chinese tech giants such as Alibaba Group Holdings Ltd. and Tencent Holdings Ltd and have listed on overseas stock markets. China’s education ministry last month created a dedicated division to oversee after-school education and tutoring following a plethora of restrictions, including caps on the fees firms can charge.

In recent months several mega-IPOs by tutoring companies have been halted after some major tutoring platforms faced fines for regulatory breaches, with Tencent-backed VIPKid and Huohua Siwei delaying U.S. listings. Shares of listed tutoring firms have been hammered, including New Oriental Education & Technology Group Inc., TAL Education Group and Gaotu Techedu Inc. Gaotu said in late May it’s closing some pre-school education and cutting staff.

The statement added that the quality of schools across China should become more balanced to prevent a “fever” among parents to try to get their children into top institutions. The government already announced in its current five-year plan that it aims to increase the number of nursery school places for infants under three years old to 4.5 per 1,000 people by 2025.

The statement also said that women’s employment rights should be better enforced, following reports of increased discrimination against women by employers following the relaxation of birth restrictions. Provinces will need to report their population policy plans to China’s central government every year, the statement added.

Amid the uncertainties of the coronavirus pandemic, China’s births in 2020 were the lowest in almost six decades. That has been declining steadily since the 1960s, with a small and temporary uptick following the introduction of a nationwide two-child limit in 2016. The statement Tuesday said that the government aims to increase the birth rate by 2025, without giving a specific target or base year against which an increase would be measured.

The declining birthrate means China’s population, currently at 1.41 billion, may begin to shrink before 2025, according to Bloomberg Economics’ estimates. However, China has maintained rapid economic expansion in recent decades despite its slowing population growth, with migration to cities and rising education-levels propelling a shift from agriculture to factory and service work, which increased economic output per worker.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.