China imposes first-ever tax on condoms to reverse falling birth rate

In a dramatic reversal of its decades-long population control policy, China has announced that it will impose a 13 per cent value-added tax (VAT) on contraceptive drugs and devices—including condoms—for the first time in more than 30 years. The new levy, part of a revised VAT law, takes effect in January, ending the exemption that had existed since 1993 when China was enforcing its strict one-child policy.

The decision is part of a larger push by the authorities to encourage families to have more children amid the country’s worsening demographic crisis. Births in China have shrunk for three consecutive years. In 2024, the number of newborns plunged to just 9.54 million — barely half the roughly 18.8 million births recorded nearly a decade ago, soon after the one-child policy was lifted.

At the same time, the government is rolling out a suite of “pro-natalist” incentives aimed at reducing the financial and social burdens of parenthood. Under the new changes, services such as childcare — including nurseries and kindergartens — along with elder-care, disability services, and even marriage-related services, will now be exempt from VAT.

Experts say the tax hike on contraceptives carries mostly symbolic significance. According to demographer He Yafu of the YuWa Population Research Institute, the move is “largely symbolic and unlikely to have much impact on the bigger picture.” What it really represents, he adds, is a shift in social messaging — from promoting birth control to encouraging childbirth.

Beyond symbolism, there are real-world concerns about the unintended effects of making contraceptives more expensive. Observers have warned that the tax may discourage condom use, potentially leading to a rise in unplanned pregnancies or sexually transmitted infections (STIs). The issue has surfaced on Chinese social media, where some users have questioned the logic — “if someone can’t afford a condom, how could they afford raising a child?” — while others warned the policy could worsen public health outcomes.

The move comes against a backdrop of rising call-offs for raising children in China, where a 2024 report by YuWa estimated that the cost to raise a child through age 18 exceeds 538,000 yuan (~US$76,000). With living and childcare costs high, growing economic uncertainty, and shifting societal values, many young adults in China are postponing marriage and childbearing, or opting out entirely.

These factors help explain why previous efforts by the government — including easing of child-limit rules, cash handouts, and childcare subsidies — have had only limited success. The latest VAT overhaul is yet another tool in a broader campaign to reshape not just fiscal policy, but social attitudes toward family and reproduction.

Still, whether this dramatic policy shift will translate into higher birth rates remains uncertain. Critics point out that nudging social behavior through taxation and subsidies may not be enough without addressing deeper economic and societal barriers such as housing costs, job security, and changing lifestyle aspirations among young Chinese.