China's National Childcare Subsidy: A Boost for Dairy Products?

Zhi Tong Financial APP has learned that China Securities Co., Ltd. has published a research report stating that on July 28, the national childcare subsidy policy was officially implemented, marking the entry of the "national support" into the field of childbirth. According to estimates, the annual amount of childcare subsidies is expected to reach approximately RMB 100 billion, which may have a multiplier effect and further increase in the future. This could boost the demand for dairy products such as milk powder, and thus drive up the overall market sentiment.

China Securities Co., Ltd.'s specific views are as follows:

National Childcare Subsidy Policy Officially Released. On July 28, the national childcare subsidy policy was officially implemented, with effect from January 1, 2025. The policy provides subsidies to children under three years old, with a standard rate of RMB 3,600 per child per year. For children born before January 1, 2025, but still below three years old, the subsidy will be calculated based on the number of months they are eligible for.

Estimated Annual Subsidy Amount: Around RMB 100 Billion. According to China Securities Co., Ltd.'s estimates, based on different assumptions about newborn numbers in 2025, the cumulative subsidy amount is expected to be around RMB 100 billion. Considering the trend of population development, China Securities Co., Ltd. expects that the number of births will decrease in the future, leading to a reduction in the annual subsidy amount, but still a significant financial expenditure.

Potential Impact on Dairy Products. For the dairy product industry, the national childcare subsidy policy may drive up demand for related products such as milk powder, which could help boost market sentiment and narrow the supply-demand gap. As a reference, in 2024, the sales revenue of large-scale dairy product companies in China was RMB 51.05 billion (not representing that residents will spend all subsidies on dairy products, but also including maternity care, baby products, early education, and children's medical care, etc.). The total subsidy amount is not small. From other consumer goods "national support" situations, in 2024, the government allocated RMB 15 billion to support long-term special bonds for consumer goods, increasing to RMB 30 billion in 2025, covering fields such as automobiles, home appliances, furniture, and digital products, etc., which has a significant impact on consumption. Therefore, China Securities Co., Ltd. believes that:

Risks. Dairy product sales continued to decline, dairy cow inventory decreased faster than expected, and food safety risks emerged.