Will China’s new tax on condoms help lift its falling birth rate? Details here

China will begin charging value-added tax on condoms and other contraceptive products for the first time in 30 years, as the country updates its tax rules and reshapes its family-planning policies, according to AFR.

Under the revised Value-Added Tax Law, a 13 per cent levy will apply to products that have been exempt since 1993, when the one-child policy was in place and birth control was widely encouraged.

Alongside this change, the government is making childcare and family-related services VAT-exempt. The list includes nurseries, kindergartens, elder-care institutions, disability service providers and marriage-related services. These exemptions will come into effect in January.

The move marks another sign of China’s shift from restricting births to trying to raise them. The country’s population has declined for three consecutive years, with only 9.54 million births in 2024 compared with 18.8 million nearly a decade earlier, when the one-child policy ended.

In recent years, Beijing has offered cash incentives, expanded childcare options and extended maternity and paternity leave. It has also issued guidelines to reduce abortions that are not considered “medically necessary” — a sharp break from the era when abortions and sterilisations were routinely carried out under official policy.

However, cost remains a major barrier. A 2024 YuWa Population Research Institute report estimates that raising a child to age 18 costs more than 538,000 yuan ($115,995). With a weak job market, slow economic growth and shifting social expectations, many young people say they simply cannot afford to have children.

Because of this, analysts do not expect the new tax to have a major impact. “Removing the VAT exemption is largely symbolic and unlikely to have much impact on the bigger picture,” said He Yafu, a demographer with YuWa. Instead, “it reflects an effort to shape a social environment that encourages childbirth and reduces abortions.”

The tax has also prompted public health concerns. HIV cases in China have risen sharply even as global numbers fall, and most new infections are linked to unprotected sex. Between 2002 and 2021, reported HIV and AIDS cases increased from 0.37 per 100,000 people to 8.41, according to the national Centre for Disease Control and Prevention.

News of the tax drew immediate reaction on Weibo, where some users worried that higher prices could lead to more unplanned pregnancies or an increase in sexually transmitted infections.