China announced a nationwide cash subsidy program for parents of young children aged three or younger on Monday, a groundbreaking move hoping to reverse the declining number of newborn babies.

The General Offices of the Communist Party of China Central Committee and the State Council, China's Cabinet, jointly released the plan, which specifies that the subsidy system take effect retrospectively from Jan 1 this year.

It will provide annual cash payments of 3,600 yuan ($502) per year for each child under the age of three who is legally born. The subsidy will be paid until the child turns three.

For children born before Jan 1 this year who are still under three, the subsidy amount will be prorated based on the number of eligible months. For example, children who are born in December 2023 are eligible to obtain 24 months of subsidies, totally 7,200 yuan.

The country will establish a unified system for the management of child-rearing subsidies.

The subsidies received under this system will be exempt from personal income tax. Furthermore, when determining eligibility for social assistance programs like minimum living allowances, these child-rearing subsidies will not be counted as household or individual income.

Parents or guardians can apply for the subsidy at the child's registered residence. Applications will primarily be processed online, with offline options also available.

Subsidies will be disbursed into the bank account or other financial account of the applicant or the child. Provincial governments will determine specific disbursement schedules to ensure efficient and timely delivery of the full subsidy amount.