A decade has passed since China lifted its one-child policy, and now the government is actively exploring diverse strategies to boost birth rates. These initiatives range from offering financial incentives to considering taxes on contraceptives and removing levies on matchmaking services and childcare facilities.

Despite these efforts, the desired increase in birth rates has yet to materialize. This is evident from the latest population data released on Monday, highlighting the challenges faced by the world’s second-most populous country.

According to new government statistics, China’s population, which remains around 1.4 billion, has continued to decline for the fourth consecutive year. In 2025, the total population was recorded at 1.404 billion, a decrease of 3 million compared to the previous year.

Furthermore, the birth rate in 2025 plummeted to 5.63 births per 1,000 people, which is the lowest since records began in 1949, the year the Communist Party under Mao Zedong took control. Unfortunately, data from the era of the prior Nationalist government is unavailable for comparison.

China, which held the title of the world’s most populous nation until 2023, saw India surpass it, marking a significant demographic shift in the region.

Monday’s statistics illustrate the stark demographic pressures faced by the country as it tries to pivot from a problem it is working hard to overcome: status as a nation with a growing but transitional economy that, as is often said, is “getting old before it gets rich”.

The number of new babies born was just 7.92 million in 2025, a decline of 1.62 million, or 17 per cent, from the previous year. The latest birth numbers show that the slight tick upward in 2024 was not a lasting trend. Births declined for seven years in a row through 2023.

Most families cite the costs and pressure of raising a child in a highly competitive society as significant hurdles that now loom larger in the face of an economic downturn that has impacted households struggling to meet their living costs.

Another potential factor in the numbers: last year in China was the year of the snake, considered one of the least favoured years for having a child under the Chinese zodiac.

Like many other countries in Asia, China has faced a declining fertility rate, or the average number of babies a woman is expected to have in her lifetime.

While the government does not regularly publish a fertility rate, last saying it was 1.3 in 2020, experts have estimated it is now around 1. Both figures are far below the 2.1 rate that would maintain the size of China’s population.

For decades, the Chinese government barred people from having more than one baby and often sanctioned those who did — a policy that produced more than two generations of only children.

In 2015, the government raised the permitted number of offspring to two and then, facing demographic pressure, further revised the limit to three in 2021.

Economics are behind the decision

The push for more births is about the economy. China now has 323 million people over the age of 60, or 23 per cent of the entire population. That number has continued to rise, while the working-age population is shrinking, meaning there are fewer workers to support the older population.

This demographic shift is happening while China is in the process of trying to transition away from labour-intensive industries such as farming and manufacturing into a consumer-driven economy built with high-tech manufacturing.

While China’s rapid development in manufacturing with high-tech and robotics can reduce the impact of a shrinking labour force, “the bigger concern is whether economic growth can stay afloat with a shrinking population,” said Gary Ng, senior economist for Asia Pacific at French investment bank Natixis.

China reported a 5 per cent annual economic growth for 2025 on Monday, based on official data. But some analysts expect growth to slow over the next few years.

To cope with these massive changes, China will eventually need to reform its pension system, Ng said, as well as broaden the tax base to cope with the higher government expenditure.

Officials have had limited success with policy changes to incentivise families to have more children. In July, the government announced cash subsidies of 3600 yuan ($769) per child to families.

Coupling incentives with other attempts to mould behaviour, the government also has started taxing condoms. China removed contraceptives, including condoms, from a value-added tax exemption list in 2025, meaning condoms are now being hit with a 13 per cent tax that kicked into effect on January 1.

To further promote child-rearing, kindergartens and daycares have been added to the tax-exemption list, along with matchmaking services.