China has introduced its first nationwide cash subsidy aimed at encouraging families to have more children, as the country confronts a sharp population decline and rising costs of child-rearing.

Starting this year, parents will receive an annual payment of 3,600 yuan (approximately $500 or £375) for each child under the age of three, state broadcaster CCTV reported on Monday. The policy, which will be applied retroactively from January 1, could benefit up to 20 million families, according to state media.

This subsidy—amounting to a total of 10,800 yuan per child over three years—is the most comprehensive measure yet in the Chinese government’s push to counter falling birth rates. It complements a range of local incentives introduced in recent years as Beijing tries to reverse a trend that has persisted despite the end of the one-child policy in 2015.

Families with children born between 2022 and 2024 will also be eligible for partial payments under the new plan.

The national rollout follows local experiments with more generous offers. In March, the northern city of Hohhot began granting up to 100,000 yuan per newborn for families with three children. In Shenyang, families receive 500 yuan monthly for each third child under age three.

Beijing has also called on local governments to improve access to free preschool education in an effort to reduce the financial pressures faced by young families.

The urgency is growing. A 2024 study by the YuWa Population Research Institute found that raising a child to age 17 in China now costs an average of $75,700—one of the highest costs globally when measured against household income.

Although China recorded a slight rise in births last year—9.54 million babies were born in 2024, up from the year before—the overall population continues to decline for a third straight year, according to the National Bureau of Statistics.

With an ageing population of 1.4 billion and fewer children entering the workforce, the Chinese government is under increasing pressure to act decisively. Experts warn that without substantial demographic policy reforms, long-term economic growth and social stability could be at risk.