Commentary: South Korea’s Rebounding Birth Rate Proves Cash Subsidies Work

Published: Jul. 13, 2026 2:36 p.m. GMT+8

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Nurses care for newborns in the nursery at CHA University Ilsan Medical Center in Goyang, South Korea, on March 26, 2026. Photo: VCG

As World Population Day approaches, a startling demographic phenomenon demands our attention: South Korea, long infamous for having the world’s lowest fertility rate, is experiencing a baby boom. After bottoming out at a dismal 0.72 in 2023, the country’s total fertility rate rebounded to 0.75 in 2024, reached 0.8 in 2025 and is projected to hit 0.9 in 2026. By April 2026, South Korean births had grown year over year for 22 consecutive months.

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South Korea's fertility rate rebounded from 0.72 (2023) to 0.9 projected (2026) after increased cash subsidies.
China’s fertility rate (~1.0) risks falling further; subsidies must reach 4.8% of per capita GDP to effectively boost births.
Funding should shift from infrastructure to human capital, supported by 30-year demographic bonds.

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1. South Korea, long known for having the world’s lowest fertility rate, is experiencing a striking demographic reversal [para. 1]. After hitting a record low of 0.72 in 2023, the rate rebounded to 0.75 in 2024, 0.8 in 2025, and is projected to hit 0.9 in 2026, with births growing year over year for 22 consecutive months by April 2026 [para. 1].

2. The primary catalyst for this reversal is generous direct cash subsidies [para. 2]. In June 2024, President Yoon Suk-yeol declared a "demographic emergency," unleashing a wave of financial incentives, including monthly subsidies for infants under 1 surging to 1 million won and combined support of nearly 30 million won ($21,000) per child [para. 3]. Local governments like Incheon amplified this by guaranteeing 100 million won per child, boosting its fertility rate above the national average and contributing to a surge in marriage registrations [para. 4].

3. A June 2025 study in The Lancet Regional Health, reviewing 61 international policies, concluded cash benefits have the most profound impact on reversing fertility declines [para. 5]. This dynamic plays out in China's Tianmen, where a package of up to 225,000 yuan ($31,000) for a third child resulted in growing birth numbers, confirming a 2024 field experiment led by Shi Zhilei finding that subsidies only boost willingness to have children once they cross a critical financial threshold [para. 6].

4. The article contrasts this with China's deepening demographic crisis, where the fertility rate hovers around 1.0 [para. 7]. It warns that without drastically increasing family support, China's birth rate could plunge below South Korea's lowest point, crushing the workforce and innovation capacity [para. 7]. A 2025 national childcare subsidy of 3,600 yuan per year for children under 3 is deemed "vastly inadequate" [para. 8].

5. To effectively boost birth rates, the author argues China should match South Korea's benchmark, where subsidies reached 4.8% of per capita GDP, compared to Japan's stagnating 3.4% [para. 9]. To achieve a 25% fertility increase, he proposes paying roughly 850 yuan per month per child up to age six [para. 9]. To reach replacement-level fertility, he suggests 1,000 yuan for the first child, 2,000 for the second, and 3,000 for the third, paid until age 18 [para. 9].

6. On affordability, the author argues China reallocate capital from physical to "human infrastructure," shifting fiscal focus from railways to social welfare, aligning with the 15th Five-Year Plan [para. 10][para. 11]. He also proposes a national childcare fund financed by 30-year demographic bonds, an investment in future taxpayers ensuring intergenerational fairness [para. 12][para. 13].

7. The article concludes that South Korea's turnaround proves aggressive, well-funded cash subsidies work [para. 14]. In an era of material abundance but an acute shortage of children, "investing in babies is the ultimate infrastructure project" for China [para. 14]. The author, Liang Jianzhang, is the executive chairman of Trip.com Group and a professor at Peking University [para. 15].

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