China has ended a decades-old tax exemption on contraceptives, including condoms and birth control pills, as part of its broader effort to reverse a sustained decline in population growth.
Beginning January 1, contraceptives are now subject to a 13 percent value-added tax, while services related to childcare, marriage, and elder care are exempt.
Why It Matters
The policy shift comes amid growing concern in Beijing over a shrinking population and the economic implications of an aging society. Official figures show that only 9.54 million babies were born in China in 2024, approximately half the number from a decade earlier. The country has now recorded three consecutive years of population decline.
As deaths have outpaced births in China, India overtook it as the world’s most populous country in 2023.
Countries like the United States also face declining birth rates, but the drop has been less severe than in China. By the end of 2024, the U.S. fertility rate had fallen to a historic low of approximately 1.599 births per woman, significantly below the replacement level of 2.1, according to the latest CDC data released in mid-2025.
What To Know
The removal of the tax exemption, which had been in place since 1994 during the one-child policy era, is the latest in a series of measures introduced by the Chinese government to encourage childbearing. The government raised the birth limit to two children in 2015. As China’s population began to peak and then fall, it was limited to three children in 2021. Contraception has been actively encouraged and easily accessible, even for free.
Other initiatives have included easing restrictions for marriage, extended parental leave, cash incentives for new parents, and subsidies for childcare.
But while the new tax on contraceptives is intended to incentivize higher birth rates, it has sparked both criticism and ridicule online. Social media users have questioned the effectiveness of the measure, pointing to the high cost of raising children as the real deterrent to starting families.
“That’s a really ruthless move,” Hu Lingling, the mother of a 5-year-old, told The Associated Press, adding that she is determined not to have another child. She said she would “lead the way in abstinence” as an act of rebellion.
“It is also hilarious, especially compared to forced abortions during the family planning era,” she said.
Experts also expressed skepticism about the policy’s effectiveness. “The idea that a tax hike on condoms will impact birth rates is overthinking it,” said Yi Fuxian, a demographer at the University of Wisconsin-Madison, in an interview with the BBC. He added that the move may be more about generating tax revenue than influencing family planning decisions.
China is one of the world’s most expensive countries in which to raise a child, according to a 2024 report by the Beijing-based YuWa Population Research Institute. The study said high school fees and an intensely competitive education system, combined with the difficulty women face balancing work and parenting, are major cost drivers.
Some researchers have suggested that directing more resources toward easing housing and other economic barriers could help slow the impact of China’s aging population, even if fertility rates do not return to replacement levels, according to the authors of a recent report by the RAND Corporation, a U.S.-based nonprofit, nonpartisan policy research organization.
What People Are Saying
Researchers at the RAND Corporation wrote in their report: “China’s fertility decline reflects unmet fertility intentions, not a lack of desire to have children. Pronatalist policy misses the mark by targeting norms and administrative reforms rather than enabling those intentions by addressing social or economic constraints.”
Yi Fuxian, a senior scientist at the University of Wisconsin-Madison, told The Associated Press: “They used to control the population, but now they are encouraging people to have more babies; it is a return to normal methods to make these products ordinary commodities.”
What Happens Next
Despite the policy’s intentions, many young Chinese remain reluctant to start families due to broader economic and social pressures.
Read the full article here
