Childbirth subsidies a small step toward rebalancing

China has just confirmed an annual childcare allowance for parents with children below 3 years old. The sums involved are too small to have a near-term impact on the birth rate or consumption. But 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.

In light of today’s announcement, we are resending analysis that we published earlier this month in response to unconfirmed reports of the scheme.