When President Lai Ching-te's administration unveiled its sweeping "cradle-to-adulthood" support package on May 20th, it cast the initiative as a turning point in Taiwan's fight against demographic collapse. The ambition is commendable. The annual price tag — over NT$200 billion — is staggering. But if two decades of pro-natalist spending in Taiwan and across East Asia have demonstrated anything, it is that throwing money at a structural problem does not make it go away. This is a Sisyphean policy: immense effort, enormous cost, and, in all likelihood, negligible results.
Taiwan's Birth Rate Has Been in Freefall for Decades
The data make for grim reading. During the postwar baby boom, Taiwan recorded roughly 400,000 births annually. The figure last hit that mark in 1982. It held in the 300,000 range for the better part of fifteen years before crossing into the 200,000s in 1998, then fell below 200,000 in 2008, when only 198,000 births were recorded. Last year, the number stood at just over 100,000 — and 2025 is on track to fall below even that threshold. Taiwan's total fertility rate has sunk to one of the lowest ever recorded anywhere in the world.
The consequences compound over time and across every domain of national life. Taiwan officially entered "super-aged society" status last year — defined as more than 20 percent of the population aged 65 or older — ahead of earlier projections. According to the National Development Council, Taiwan's demographic dividend will be exhausted by 2028. By 2070, the total population is projected to shrink from 23.4 million today to just 14.97 million — a loss of 8.44 million people. At that point, those aged 65 and over will represent 46.5 percent of the population, and the working-age support ratio will collapse from 3.6 workers per retiree to just one.
The implications are severe across economics, public finance, and national security alike. A society where nearly half the population is retired cannot sustain robust economic output. Pension systems face structural insolvency. And for those who frame Taiwan's strategic challenge in terms of military deterrence, the arithmetic is equally stark: a shrinking youth cohort means a shrinking pool of military-age personnel — a reality that no amount of defense spending can compensate for.
Two Decades of Subsidies Have Not Moved the Needle
The urgency is real. What is far less clear is whether cash transfers can address it.
The package announced on May 20th has two main pillars. Premier Cho Jung-tai (卓榮泰) confirmed that parental leave — currently available until a child turns three — would be extended to age six. President Lai then announced a monthly growth stipend of NT$5,000 per child from birth through age 18, rising to NT$10,000 for children under six. The combined annual cost is estimated at NT$200 billion.
The problem is that Taiwan has been running variations of this same playbook for over two decades. Central and local governments alike have steadily raised birth incentives, expanded subsidies, and rolled out new support programs. Yet throughout that entire period, annual births have continued to fall — from the 300,000s to the 200,000s to the 100,000s. Monthly birth figures this year are running below year-earlier levels across the board. The trajectory remains downward, with no floor in sight.
Taiwan is not alone in confronting the limits of pro-natalist spending. Advanced economies and East Asian neighbors that faced low fertility earlier have found, almost without exception, that financial incentives cannot reverse a structural decline once it takes hold. There is no documented case of a developed society engineering a sustained fertility recovery through subsidy programs alone.
The Root Causes of Low Fertility Are Not Financial
That track record points to a more fundamental flaw in the policy's underlying diagnosis. The Lai administration appears to be treating low fertility primarily as an economic problem — the assumption being that young people are not having children because they cannot afford to. The evidence does not support this.
If cost were the decisive barrier, we would expect higher-income households to raise significantly larger families than lower-income ones. Taiwan's technology sector professionals and financial industry workers — people with well-above-average earnings — do not appear to be having notably more children than their counterparts in manufacturing or services. The relationship between income and fertility in Taiwan, as in most developed societies, is weak or even inverted.
The real drivers of low fertility lie elsewhere: in shifting social values, changing expectations around personal autonomy and career, housing costs relative to lifestyle aspirations, and the demands of modern professional life. These are not problems that a monthly stipend can solve.
What Should Come Before the Spending
Before committing NT$200 billion a year to a program of uncertain efficacy, the government should invest in rigorous research into why young Taiwanese are choosing not to have children. Without that diagnostic foundation, policy is unlikely to address the actual barriers to family formation — and risks simply transferring large sums to families who would have had children regardless.
If that research confirms what international experience already suggests — that the demographic trend is difficult or impossible to reverse through incentives alone — then the more productive response may be to redirect resources toward adapting Taiwan's economic and social institutions to an older, smaller population, rather than pursuing an ever-larger subsidy program with diminishing returns.
None of this means the spending is entirely without value. It does provide direct financial support to families already raising children, which has its own social justification. And from a political standpoint, the initiative signals that the Lai administration is taking the demographic crisis seriously and is prepared to act at scale.
But signaling intent and solving the problem are different things. In the case of Taiwan's birth rate, conflating the two may cost the country both money and time it can ill afford to waste.
Original Article in Chinese （Related： Taiwan Independence Shrinks to a Slogan Under Lai Ching-te ｜ Latest ）
