China's population has declined for three consecutive years, with United Nations demography models predicting it could fall from around 1.4 billion today to 800 million by 2100.
There were just 9.54 million births in China last year, half the number in 2016, when Beijing ended its one-child policy after more than three decades.
The population declined by 1.39 million last year, and China lost its crown as the world's most populous country to India in 2023.
Marriage rates are also at record low levels, with many young couples put off having babies by high child-rearing costs and career concerns.
On Tuesday China's cabinet, the State Council, announced that: "starting in the fall semester of 2025, childcare and education fees will be waived for children attending public kindergartens in the year before school".
The policy aims to "effectively reduce the cost of education, improve the level of public education services, and provide education that satisfies the people", the State Council said.
Beijing described it as an "important measure that concerns thousands upon thousands of households and relates to long-term development".
Funding for the new measure would be shared between central and local authorities, while children attending approved private kindergartens would also be eligible for fee reductions.
The announcement comes a week after the country said it would offer parents the equivalent of $500 per year for each child under the age of three.
At a news conference in Beijing last week, National Health Commission (NHC) official Wang Haidong acknowledged that the country had "gradually shifted from a phase of population growth to a phase of population decline".
"The childcare subsidy system can directly increase people's cash income," Guo Yanhong, vice minister of the NHC, said.
Chinese leaders have in recent years struggled to breathe life into the economy, beset by a years-long property crisis that has spooked would-be homebuyers and dissuaded many people from having children.
China's shrinking population is also ageing fast, sparking worries about the future of the country's pension system.
There were nearly 310 million people aged 60 and over in 2024.
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