Not infra or manufacturing, children are best investment, says China think tank

In China, the best investment people can look into is not property or manufacturing but children, a Beijing-based think tank has said.

China, the world’s second-largest economy, has struggled to mount a strong post-pandemic recovery and any decline in its future workforce and consumer demand could have a profound impact on its economy.

A policy paper by the Yuwa Population Research Institute says, “In the current Chinese economy, children are the best investment. Infrastructure investment is becoming saturated, manufacturing has overcapacity … but investment in the number of children is not enough.”

The paper also called on Chinese authorities to “urgently” reverse a rapid decline in the number of newborns.

China’s advantage will shrink in the future as the young population shrinks rapidly, while economic measures such as cutting interest rates, activating the capital market and optimising real estate regulation have not helped to bolster economic growth and the recovery remains weak, it said.

The Yuwa research paper recommends maternity subsidies be distributed at a national level instead of allocation by local governments and suggests targeted measures to be implemented to reduce the large cost of childbearing to boost the economy.

“Nowadays people are unwilling to get married and have children … Because the cost of childbearing is too high, the difficulty for women to balance family and work, the average fertility willingness of Chinese people is almost the lowest in the world,” it said.

Current subsidies are still insufficient, lower than most European countries it said.

China reported a drop of roughly 850,000 people for a population of 1.41175 billion in 2022, marking the first decline since 1961, the last year of China’s Great Famine.

With inputs from Reuters