China will allow couples to have 3 children in a major policy shift designed to reverse shrinking birth rates

• China is now allowing married couples to have three children, up from the previous limit of two.
• The new three-child policy is in response to a declining birthrate in China.
• Experts say the main barrier to having children in China is the high cost of raising kids.
• See more stories on Insider’s business page.

China said on Monday that married couples may have up to three children, a major policy shift from the existing limit of two, after recent data showed a dramatic decline in births in the world’s most populous country.

Beijing scrapped its decades-old one-child policy in 2016, replacing it with a two-child limit that failed to trigger a sustained surge in births. Raising children in Chinese cities remains expensive.

“To further optimize the birth policy, (China) will implement a one-married-couple-can-have-three-children policy,” the official Xinhua news agency said in a report following a meeting chaired by President Xi Jinping.

The policy change will come with “supportive measures, which will be conducive to improving our country’s population structure, fulfilling the country’s strategy of actively coping with an ageing population and maintaining the advantage, endowment of human resources,” Xinhua reported.

It did not specify the support measures.

“People are held back not by the two-children limit, but by the incredibly high costs of raising children in today’s China. Housing, extracurricular activities, food, trips, and everything else add up quickly,” Yifei Li, a sociologist at NYU Shanghai, told Reuters.

“Raising the limit itself is unlikely to tilt anyone’s calculus in a meaningful way, in my view,” he said.

In a poll on Xinhua’s Weibo account asking #AreYouReady for the three-child policy, about 29,000 of 31,000 respondents said they would “never think of it,” while the remainder chose among the options: “I’m ready and very eager to do so,” “it’s on my agenda,” or “I’m hesitating and there’s lot to consider”.

The poll was later removed.

“I am willing to have three children if you give me 5 million yuan ($785,650),” one user posted.

Shares in birth- and fertility-related companies surged.

Early this month, China’s once-in-a-decade census showed that the population grew at its slowest rate during the last decade since the 1950s, to 1.41 billion. Data also showed a fertility rate of just 1.3 children per woman for 2020 alone, on a par with ageing societies such as Japan and Italy.

China’s politburo also said it would phase in delays in retirement ages, but did not provide any details.

Fines of 130,000 yuan ($20,440) were being imposed on people for having a third child as of late last year.