China Taxes Condoms and Contraceptives in Bold Push to Reverse Population Decline

China has taken one of its most controversial demographic steps in decades by imposing a 13 per cent value-added tax on condoms, contraceptive drugs, and birth control devices, ending nearly 30 years of tax exemptions on reproductive health products. The policy, which came into effect on January 1, is part of an aggressive strategy by the Chinese government to address the country’s rapidly declining birth rate and long-term population shrinkage, a challenge that now threatens economic growth, workforce stability, and social welfare systems.

The decision follows three consecutive years of population decline, with official data showing that China’s population has been shrinking since 2024 despite the relaxation and eventual scrapping of the infamous one-child policy. Once the world’s most populous nation, China is now facing a demographic turning point marked by fewer births, an aging population, and a shrinking labor force. Authorities say the tax reform is intended to subtly discourage the widespread use of contraceptives while complementing broader incentives designed to make childbirth more attractive and affordable for young couples.

For decades, condoms and contraceptives enjoyed tax-free status as part of China’s family planning agenda, especially during the era of the one-child policy between 1980 and 2015. That policy, which successfully curbed population growth, is now widely blamed for accelerating demographic imbalance, including a rapidly aging population and a declining number of working-age citizens. In a striking reversal, the government is now attempting to undo the long-term effects of its own population control measures by encouraging families to have more children.

Chinese officials argue that the removal of tax exemptions aligns with the country’s current demographic priorities. While the tax does not ban or restrict access to contraceptives, critics say it sends a symbolic message that reflects the government’s desperation to boost birth rates. Supporters within policy circles, however, insist the move is just one piece of a larger demographic puzzle, aimed at reshaping social behavior rather than forcing outcomes.

The new tax policy is being rolled out alongside significant financial incentives for families. Among the most notable measures is a 90 billion yuan ($12.7 billion) national childcare subsidy program designed to ease the financial burden of raising children. Starting in 2025, families will receive an annual allowance of 3,600 yuan for each child under the age of three. Authorities say this support is meant to address one of the biggest reasons young people are avoiding parenthood: cost.

In addition to direct subsidies, China’s healthcare insurance system will now fully cover childbirth-related expenses, including hospital deliveries and postnatal care. This policy shift is intended to remove financial anxiety surrounding pregnancy and childbirth, particularly in urban areas where medical costs are high and living expenses continue to rise. Local governments have also been encouraged to introduce housing benefits, extended parental leave, and workplace protections for parents, especially mothers.

Despite these measures, public reaction to the tax on contraceptives has been mixed, with intense debate playing out on Chinese social media platforms. Some citizens view the move as intrusive and ineffective, arguing that the real reasons people are choosing not to have children have little to do with access to contraception. High housing costs, job insecurity, long working hours, and the rising cost of education are frequently cited as far more influential factors.

Young women, in particular, have voiced concerns that the policy could disproportionately affect them, both financially and socially. Advocacy groups warn that taxing contraceptives could unintentionally increase the risk of unplanned pregnancies while failing to address deeper structural issues. Others argue that reproductive choices should remain personal and free from economic pressure, regardless of national demographic goals.

Economists and demographers note that China’s population crisis is not unique. Several developed and developing countries, including Japan, South Korea, and parts of Europe, are grappling with similar challenges as birth rates fall below replacement levels. What sets China apart, however, is the speed and scale of its demographic shift, driven in part by decades of strict population control.

According to population experts, reversing a declining birth rate is far more complex than encouraging people to have children through subsidies or policy nudges. Cultural attitudes toward marriage and parenthood have changed significantly, particularly among younger generations who prioritize personal freedom, career growth, and financial independence. Many analysts believe that without fundamental reforms to work culture, gender equality, and social welfare, policies like taxing contraceptives may have limited impact.

The Chinese government, however, appears determined to experiment with a wide range of solutions. In recent years, authorities have loosened restrictions on family size, promoted three-child families, and launched public campaigns celebrating parenthood. Some regions have introduced matchmaking initiatives and incentives for early marriage, while others have offered cash rewards for second and third children.

Officials maintain that sustaining population growth is critical to China’s long-term economic ambitions. A shrinking workforce could slow industrial productivity, strain pension systems, and reduce consumer demand, all of which pose risks to economic stability. With fewer young people entering the labor market, the burden on the working population to support an aging society continues to grow.

As the new tax on condoms and contraceptives takes effect, its real impact remains uncertain. While it may slightly increase the cost of birth control, experts say it is unlikely to dramatically change reproductive behavior on its own. Instead, the policy has reignited a broader national conversation about the balance between state intervention and personal choice, as well as the challenges of managing demographic change in a modern society.

For now, China’s bold and controversial move underscores the seriousness of its population crisis. Whether taxing contraceptives will meaningfully contribute to a baby boom or simply fuel public backlash remains to be seen. What is clear is that after decades of trying to limit births, China is now racing against time to convince its citizens that having more children is not just desirable, but possible in an increasingly expensive and demanding world.