China has ended a decades-long tax break on contraceptives in a bid to address its declining birth rate, introducing a 13% value-added tax on condoms and birth control pills from January 1. The move marks a significant shift in Beijing’s approach to population policy, signaling the government’s concern over the nation’s shrinking workforce and aging population.
The change comes as China faces its third consecutive year of population decline, a trend experts warn is likely to continue. Policymakers have grappled with the social and economic consequences of decades of population control, combined with rapid urbanization and rising living costs, which have made marriage and childbearing increasingly challenging for young people.
In recent years, the government has rolled out a range of measures aimed at encouraging families to have more children. Last year, personal income tax exemptions were granted for childcare subsidies, and an annual childcare allowance was introduced. Universities and colleges were also urged to provide “love education” programs designed to promote marriage, family, and childbearing as positive life choices.
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Despite these efforts, birth rates have continued to fall, reflecting broader economic pressures. The high cost of raising children, expensive education, and concerns about job stability have discouraged many young couples from starting families.
At the annual Central Economic Work Conference last month, China’s top leaders reaffirmed their commitment to promoting “positive marriage and childbearing attitudes” as part of a broader effort to stabilize the population. Analysts say the new VAT on contraceptives reflects a delicate balancing act: while the government aims to stimulate fertility, it also needs to increase tax revenues amid slower economic growth.
China’s population challenges are a long-term consequence of the one-child policy, which was enforced from 1980 to 2015, and decades of urban migration that have reshaped traditional family structures. Even as policymakers introduce “fertility-friendly” policies, reversing the cultural and economic trends that have kept birth rates low is likely to take years, if not decades.
The new tax on contraceptives underscores the urgency Beijing attaches to population issues, as the country navigates the economic and social risks of an aging society while trying to encourage a younger generation to embrace family life despite mounting pressures.