China is planning to pour money into elderly and childcare services over the next five years, as the government looks to cope with a rapidly aging population and reverse a plummeting birth rate.

The plan to boost the supply of affordable services was released Friday by the National Development and Reform Commission, the country's top economic planner, and comes as demographics increasingly pose a risk to the world's second-largest economy.

As of the end of last year, China was home to 260 million people aged 60 and above--accounting for 18.70% of the population--and that number is projected to grow at an annual rate of 10 million, fueling demand for better elderly care services, the commission said.

An aging population could reduce the supply of labor force, increase burdens on families and ramp up pressure on the supply of basic public services, commission deputy director Ning Jizhe said at a press conference last month. But it could also expand the consumption of products and services for the elderly, he added.

China is also grappling with a record-low fertility rate, prompting authorities to further loosen the country's birth-control policy by allowing couples to have three children each.

China has had strict birth restrictions in place since 1980, when the country's policy makers saw the country's fast-growing population as an obstacle to economic success, with many families fined for having more than one baby. As the negative impact of the birth controls has become clearer, authorities have been gradually lifting restrictions and abolished the one-child policy by allowing two babies in 2016.

The results of the country's once-a-decade census last month showed that its population increased 5.38% to 1.41 billion in 2020. The fertility rate of 1.3 children per woman for 2020 is lower than that of other ageing societies like Japan.

The commission attributes factors including heavy economic burdens and a lack of childcare services to the drop in fertility, noting the mismatch between fast-growing demand and the strained supply of services that parents rely on.

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(END) Dow Jones Newswires

06-25-21 0528ET