China's baby steps: Ageing Beijing to tax condoms, contraceptives; why Xi is worried
China has begun taxing condoms and contraceptives at a 13% VAT rate, ending a long-standing exemption. This move signals a significant policy shift as the government intensifies efforts to combat a deepening demographic decline and boost birth rates. The population has fallen for three consecutive years, with experts warning of continued decline.
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China has begun taxing condoms and other contraceptives, ending a three-decade exemption as the government intensifies efforts to reverse a deepening demographic decline. From January 1, condoms and contraceptive pills are subject to a 13% value-added tax, the standard rate applied to most consumer goods, according to Reuters.The move marks another sharp turn in Beijing’s population policy as China struggles to lift birth rates in the world’s second-largest economy. The population fell for a third consecutive year in 2024, and experts have warned the decline is likely to continue. Last year, China recorded just 9.54 million births, roughly half the number seen in 2016, the year the one-child policy formally ended.China’s leadership has repeatedly linked population decline to long-term economic risks, with officials warning the country could “get old before it gets rich” as the population ages rapidly.
Nearly 310 million people in China were aged 60 and above in 2024.
From birth control to pro-natal push
The decision to tax contraceptives highlights the scale of Beijing’s policy reversal. When China’s population neared one billion in the late 1970s, then leader Deng Xiaoping introduced the one-child policy, enforced through fines, surveillance and, in some cases, forced abortions and sterilisation.That approach remained in place for decades before being loosened to allow two children in 2016 and three in 2021.
Despite those changes, birth rates continued to fall, driven by rising living costs, rapid urbanisation and changing social attitudes.Now, authorities are promoting marriage and childbirth as national priorities. Colleges and universities have been urged to offer “love education” portraying marriage, fertility and family life positively. At last month’s Central Economic Work Conference, top leaders again pledged to promote “positive marriage and childbearing attitudes” to stabilise population growth.
Subsidies fall short of family costs
Alongside taxing contraceptives, Beijing has rolled out cash incentives. Parents now receive an annual subsidy of 3,600 yuan (about $500) for each child under the age of three, applicable to children born from January 1, 2025. Over three years, families can receive up to 10,800 yuan per child. Childcare subsidies have also been exempted from personal income tax, and a free public preschool scheme has been launched.State broadcaster CCTV described the policy as a nationwide effort to improve public wellbeing and ease the burden of raising children. However, many remain sceptical. A study by the YuWa Population Research Institute estimates it costs around 538,000 yuan to raise a child to 18, rising beyond one million yuan in cities such as Shanghai.