China has ended a tax exemption on contraceptive drugs and devices that had been in place for more than three decades, bringing condoms and birth control pills under a 13% value-added tax from January 1, as the government looks for ways to arrest the country’s falling birth rate.
According to a report by Reuters, the products will now be taxed at the standard VAT rate applied to most consumer goods. The exemption had been in effect since the early 1990s.
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The move comes as China’s population declined for a third consecutive year in 2024. Demographers have warned that the downward trend is likely to continue, with fewer young people choosing marriage and parenthood.
Policy shift amid widening demographic pressure
Beijing has rolled out a series of measures over the past two years aimed at encouraging childbirth. These include exempting childcare subsidies from personal income tax, introducing an annual childcare allowance, and urging universities to promote what officials have described as “positive” views on marriage and family life, Reuters reported.
Senior Chinese leaders reiterated the focus on stabilising birth rates at last month’s Central Economic Work Conference, where they pledged to promote what they called “positive marriage and childbearing attitudes”.
China’s birth rate has been falling for decades, a trend shaped by the one-child policy that was enforced from 1980 to 2015, along with rapid urbanisation. High housing costs, expensive education, job insecurity and a slowing economy have further discouraged young couples from starting families.
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As reported by Mint, the tax change has drawn attention because it comes alongside financial incentives for parents, creating a mixed policy signal. While authorities are increasing support for childcare, they are also raising the cost of contraception.
China’s population first declined in 2022, and the country was overtaken by India as the world’s most populous nation the following year. Official data show the total fertility rate remains far below the level needed to maintain population size.
Experts have warned that a shrinking workforce and a rapidly ageing population are placing long-term strain on China’s pension system and economic growth prospects.
