James Jianzhang Liang proposes Beijing invest 10 trillion in birth stimulus
Chairman of Trip.com highlights an economy that hinges more than anything on births.
The notion "10-trillion yuan stimulus" already made its debut before Beijing's major economic policy shift in late September, sparking widespread discussion. On September 21, Liu Shijin, Former Vice President (Vice Minister) of the Development Research Centre (DRC), a comprehensive policy research and consulting institution directly under the State Council, proposed a stimulus package of no less than 10 trillion yuan, financed through ultra-long-term special treasury bonds over one to two years.
Soon, the "10-trillion yuan stimulus" proposal was picked up and expanded upon by other economists.
Teng Tai, Head of the WANB Institute and the chief economist at China Galaxy Securities and Minsheng Securities published an article two days after Liu's proposal, fully endorsing the necessity of the 10-trillion-yuan economic stimulus plan and advocating for a focus on consumption subsidies rather than further investment expansion.
In an interview published on October 1, Jia Kang, former Director-General of the Institute for Fiscal Science (now Chinese Academy of Fiscal Sciences), the finance ministry's in-house think tank, also echoed the urgency for stimulus measures, saying, "Scaling up the bond issuance to 4 trillion or even 10 trillion yuan would not be excessive."
According to the South China Morning Post report on October 18, Liu Shangxi, former Director-General of the Chinese Academy of Fiscal Sciences and Jia Kang's successor, proposed that the combined value of stimulus "should absolutely surpass" 10 trillion yuan.
More recently on November 8, speaking at the 15th Caixin Summit organized by Caixin Media and Caixin Think Tank in Beijing, James Jianzhang Liang, Co-founder and Chairman of Trip.com Group and a public intellectual on China's birth policies, called for Beijing to invest the much-heralded 10 trillion yuan in pro-birth initiatives.
Liang presented his speech just hours before the Chinese government announced a 12 trillion yuan stimulus package, albeit mostly targeted at local government debts.
Liang identifies population decline as the root cause of China's economic challenges, linking it to insufficient domestic demand, deflation, and reduced long-term economic dynamism. He attributes China's low birth rates to have children to a disproportionate burden of child-rearing costs and time placed solely on families, while society at large reaps the benefits, creating a mismatch that stifles population growth. Therefore, Liang proposes that China invest 10 trillion yuan in subsidies, tax cuts and exemptions, expanded childcare services, and educational reforms. These measures would "kill two birds with one stone," said Liang, simultaneously stimulating demand and securing China's economic future.
The video recording of Liang's speech is available on the Caixin Summit's website. A transcript was initially posted on Rao Liang Shuo 绕梁说, Liang's personal WeChat blog, but it is now unavailable due to a "content regulation violation," although other reposts remain accessible on the Chinese internet.
Liang has been frequently featured in The East is Read and Pekingnology.
—Yuxuan Jia
梁建章：把新的10万亿投资给孩子
James Jianzhang Liang: Invest 10 Trillion Yuan in Children
Today's topic is very timely, as China is currently facing a severe economic situation, both in the short and long term.
In the short term, it is widely recognized that the economy is suffering from insufficient demand, which is closely related to deflation, declining prices, and issues with employment and unemployment. Over the long term, China faces an even more significant challenge: a sharp decline in birth rates. The number of births dropped from 18 million in 2016 to just 9.02 million last year, having halved in only seven years—an event unprecedented in human history and extraordinarily rare in times of peace. Moreover, the outlook for the birth rate shows few signs of improvement.
This decline poses serious challenges to China's long-term economic dynamism, innovative capacity, and comprehensive national strength. It has already dampened the confidence of some companies and households, influencing their decisions on investment and consumption, so this is not only a long-term issue but also an immediate concern.
A Solution that Kills Two Birds with One Stone: Investing 10 Trillion Yuan in Children
How to address these two issues is the topic I will explore with you today. Fortunately, these two problems can offset each other: one stems from a lack of avenues to spend money, while the other requires increased spending. Thus, there is a chance to achieve a twofold outcome—solving both issues with a single solution. I propose that the most urgent approach is to spend money to stimulate population growth, which would simultaneously address both the long-term population challenge and the short-term insufficient demand.
So, how exactly should this money be spent? Of course, economic stimulus is a topic of great interest, and discussions have been ongoing. Debt resolution will certainly be part of these measures, without which the economy would be sure to continue declining. So an essential step toward stabilization is to resolve debts, including local government debt. The real estate sector also has significant debt, which might require the acquisition of some existing properties. Another option is increasing investment, as China has done in the past, in areas such as urban renewal and new energy infrastructure.
However, these actions would merely prevent further decline. To generate additional demand, China needs innovative solutions—approaches the country has not taken or implemented before, that is, directly providing financial support to consumers. Specifically, this could involve targeting families with children or those planning to have children. This approach could yield a twofold benefit, offering a substantial, additional incentive to consumption.
How large should China's stimulus be to start with? The scale might need to be a few percent of GDP—10% of GDP or even an absolute amount of around 10 trillion yuan. During the 2008 economic crisis, China implemented a 4 trillion yuan stimulus, which played a key role in revitalizing the economy. 4 trillion yuan at that time was roughly equivalent to 10 trillion yuan in today's terms. 10 trillion yuan represents even less than 10% of China's current GDP.
China's Era of Inflation is Long Past
Some may ask, would this cause inflation? I believe that China's era of inflation is long over. Basic consumer goods in China are, by and large, in serious oversupply across the board. Take food as an example: China's agricultural products are not only abundant in supply but also highly efficient, and per capita consumption has reached a very high global standard. Statistics suggest that China's per capita pork consumption exceeds the global average; with less than 20% of the world's population, Chinese people consume half of the world's pork. Similarly, with under 20% of the world's population, Chinese people consume 40% of the world's seafood. Even if more money was distributed, would there be more consumption of pork or seafood? There might be a modest rise, but the production capacity is undoubtedly sufficient to meet the additional demand.
Manufacturing is even more telling. China's capacity is sufficient to fully meet, or even exceed, global demand. Take new energy vehicles (EVs) as an example: China could easily double its EV production capacity without any difficulty. If consumer purchasing power were higher, and per capita car production were not so disproportionately high, an additional 10% in consumer demand for goods could be entirely absorbed by China's existing production capacity. Such an increase would not trigger inflation; rather, it would make more efficient use of capacity and create additional employment opportunities. I believe these essential goods are unlikely to experience inflation in the future.
The only possible source of inflation might be if people genuinely had the means to purchase luxury goods or if hotel prices surged in popular tourist destinations. However, despite the rise in travel this year, China's hotel supply has also exceeded demand, with occupancy rates actually declining due to the opening of so many new hotels.
Overall, almost every industry in China faces overcapacity, with surpluses well exceeding 10%. As a result, a 10% boost in consumption would not trigger inflation.
The current deflationary situation is quite severe. As is widely understood, deflation means that money becomes increasingly valuable, prompting people to save rather than spend, which creates a vicious cycle. To revive China's economy, it is crucial to first stimulate demand and reverse this deflationary trend. Spending however, is not easy—China needs to identify opportunities to spend money.
China doesn't lack money; rather, there is a shortage of avenues for spending. In the past, much of China's spending, including the 4 trillion yuan stimulus, was directed toward infrastructure. But now, there aren't many high-return infrastructure projects around. Many regions already have high-speed rail networks, leaving limited opportunities for further railway or highway expansion. Only a few cities still have a significant demand for new housing. In large cities like Shanghai and Beijing, office vacancy rates are high, and in the future, these spaces may need to be repurposed for residential or other uses.
Investing in new energy does present opportunities. For instance, constructing numerous new energy power plants or data centers in western China is feasible and can be accelerated. However, the overall scale of such investments is still far from sufficient to boost consumption by trillions of yuan.
So, where can China invest? Currently, China lacks nothing except people; the country faces a future shortage of children. In fact, the most worthwhile investment is in the next generation—the children. Such an investment will truly stimulate both consumption and employment.
Mismatch Between Investment and Return: How to Address the Challenge of Young People Wanting Children but Fearing the Costs?
Young people complain they don't have enough money to have children, while society at large lacks avenues to spend money. Young people also cite a lack of time due to heavy work or educational pressures, yet society simultaneously faces underemployment and struggles to create sufficient jobs. This clearly illustrates a mismatch: families experience shortages of money and time, while society has surplus resources and labor. Why, then, haven't societal resources been directed toward supporting families?
The core issue is that the financial and time burden of raising children falls on individual families and parents, whereas the returns—future taxpayers, innovators, and consumers—benefit society as a whole. This disconnect creates a misalignment between private interests and national priorities.
The solution is straightforward: national policies must redirect more societal resources to families to resolve the mismatch.
I have consistently advocated for pro-birth welfare measures, based on two perspectives: money and time. From a financial perspective, support measures could include direct cash payments, tax reductions, and housing subsidies. For cash payments, given that raising a child costs several thousands yuan per month, families could receive a subsidy ranging from 1,000 to 6,000 yuan per month, depending on their number of children.
To address the immediate need to stimulate demand, I propose complementing these monthly payments with a lump-sum subsidy of 100,000 yuan for each newborn. This should serve as a sufficient incentive for families in smaller cities or with moderate incomes. However, for families in larger cities with higher living costs and incomes, this support may fall short.
For families in big cities burdened by high child-rearing expenses, tax reductions or exemptions could provide effective relief. Since these children will contribute to future social security and tax revenues, a portion of taxes could be refunded to their parents. For example, families with two children could receive a 50% tax refund, while families with three children could qualify for a full refund, subject to certain limits. Additionally, given the steep housing prices in large cities, raising two or more children may require an additional 10 to 20 square meters, potentially costing millions of yuan. Subsidized low- or zero-interest loans could help families cover these expenses. Such measures could collectively stimulate an additional one to two trillion yuan in consumption. Child-related medical services, including reimbursement for fertility treatments, could also be incorporated into health insurance plans.
Money is only one part of the equation; availability of time is even more critical. Parents invest both money and time in raising children, especially mothers, who have to take maternity leave, helping with children's homework, and taking children to and from school. Raising a child is incredibly time-consuming. So, how can China ease the time burden on families?
First, by building more daycare centers. France, for example, offers universal daycare services for children from just a few months old up to age three. China needs to establish more daycare centers. Many kindergartens, currently struggling due to the decline in births, could diversify their services to include daycare, thereby increasing childcare capacity and creating new employment opportunities for nannies.
Second, equal parental leave for both men and women should be offered, and duration of parental leave extended. Companies should be encouraged to provide flexible work options, especially for employees with children. Trip.com, for example, allows employees to work from home two days a week.
Another effective approach is to offer additional breaks for children and parents, like spring and fall breaks. Each child could have an extra week off in these seasons, giving parents the chance to spend quality time with their children on outings or trips. This would allow parents more time to bond with their children. To avoid overcrowding, these breaks could be staggered by age group, rather than everyone taking time off simultaneously, like during a Golden Week. This staggered approach would provide families with more opportunities for consumption and vacations.
The Purpose of Learning is Work, while the Purpose of Education is a Good Life
Education reform and reducing student burdens is a significant topic. Currently, students face too many exams and too much pressure—entrance exams for middle school, university, and now even graduate school have turned into intense competitions. Are these so many exams really necessary?
The purpose of learning is to prepare for work, while the goal of education is to cultivate the ability to lead a fulfilling life, which requires more skills and personal development. In this context, early tracking into academic or vocational pathways is unnecessary, and more people should have the chance to attend university. China now has a surplus of universities; China lacks nothing, not even educational resources. Although many people currently don't attend university, China's number of births has significantly declined. In the future, even if all high school graduates attend university, China's universities would more than suffice. China should universalize secondary, high school, and university education while reducing the number of exams. This approach would improve the efficiency of education and reduce the intense competition and pressure among students.
China urgently needs to identify areas for investment and spending. Children are currently China's most lacking resource, the most worthwhile place to allocate resources, and the best investment. The greatest underlying risk to China's economy is the collapse of the population. The country's future innovation, the strength and integrity of its supply chain, and even its comprehensive national strength and security depend on maintaining a stable population. A rapidly shrinking population would pose serious challenges to all these areas. At present, China faces no shortages in infrastructure, education, or production capacity—these are already in oversupply. The only thing China truly lacks—or most urgently needs—is children.
The root cause of the current situation is the mismatch between the investment and its return. The investment burden falls on parents, yet the returns benefit society as a whole. Thus, addressing this issue requires action at the national level, with central government funding. China should channel more welfare support—both in terms of time and money—to families raising children, as this provides a twofold solution. A new 10 trillion yuan investment is indeed vital, with a significant portion dedicated to the country's future—our children.
I have been advocating for population policies for years. Addressing the low birth rate is a global challenge, but China’s unique system provides an advantage, enabling the country to mobilize societal resources more effectively and proactively to invest in children and foster a family-friendly society.
Small countries, like Singapore, don't face as much pressure regarding birth rates because they can address population issues by bringing in foreign immigrants. However, large countries like China must seek to resolve the low birth rate issue.
To sum up, a great nation needs "great families." I hope everyone here can join efforts to build this social consensus. Together, let's work together to address this challenge, which is the most urgent and deserving of solutions today in China. Thank you, everyone!
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