Married Chinese couples may have up to three children, China announced on Monday, in a major shift from the existing limit of two after recent data showed a dramatic decline in births in the world's most populous country.
According to state media, the move was approved by President Xi Jinping following concerns about the country's slow growing population.
It said leaders agreed "implementing the policy of one couple can have three children and supporting measures are conducive to improving China's population structure".
For nearly 40 years, China enforced a controversial "one-child policy" - one of the strictest family planning regulations worldwide - which was relaxed in 2016 to a "two-child policy" due to widespread concerns over an ageing workforce and economic stagnation.
Among those measures, China will lower educational costs for families, step up tax and housing support, guarantee the legal interests of working women and clamp down on "sky-high" dowries, it said, without giving specifics.
The announcement drew a chilly response on Chinese social media, where many people said they could not afford to have even one or two children.
Early this month, China's once-in-a-decade census showed that the population grew at its slowest rate during the last decade since the 1950s, to 1.41 billion.
What was the "one child" policy?It also used more nefarious means, such as coerced abortions and sterilization.
Births out of marriage are also considered a violation of China's strict family planning rules and unmarried couples had to pay a fine to register their newborn.
But annual births have continued to plummet to a record low of 12 million in 2020, Beijing's National Bureau of Statistics said this month, as the cost of living rises and women increasingly make their own family planning choices.
The ruling party has enforced birth limits since 1980 to restrain population growth but worries the number of working-age people is falling too fast.
China has a traditional social preference for boys which prompted sex-selective abortions and abandoned baby girls.
Shares in birth- and fertility-related companies surged.
A study published earlier this year by academics from Hangzhou University found that the two-child policy encouraged wealthier couples who already had a child and were "less sensitive to child-rearing costs", while driving up the costs of child care and education and discouraging first-time parents.
China, along with Thailand and some other Asian economies, faces what economists call the challenge of whether they can get rich before they get old.
A third of Chinese are forecast to be elderly by 2050, heaping huge pressure on the state to provide pensions and healthcare.
The Politburo also was in favour of lifting the retirement age in a phased manner.