By Myke Uzendu, Abuja
In a move to encourage higher birth rates, China ended a more than three-decade tax exemption on contraceptives and imposed a standard 13% value-added tax (VAT) on condoms, birth control pills, and other devices effective January 1.
The policy shift, which is part of a broader revision to the country’s VAT law, comes as China’s population continues to shrink for the third straight year, raising alarms about an aging workforce and long-term economic growth. Following the end of the strict one-child policy in 2015, Beijing has increasingly focused on pro-natalist measures to reverse declining fertility rates.
While the tax on contraceptives is seen by some experts as largely symbolic—given that the added cost on a typical packet of condoms (around 40-60 yuan) is minimal compared to child-rearing expenses—it has sparked online ridicule and concerns over potential rises in unplanned pregnancies and sexually transmitted infections, particularly among lower-income groups.
At the same time, the government is rolling out significant incentives to support families, including a nationwide childcare subsidy program valued at approximately 90 billion yuan ($12.7 billion), an annual allowance of 3,600 yuan per child under three years old starting in 2025, and plans to fully cover childbirth-related medical expenses under national health insurance by 2026. Childcare, elderly care, and marriage-related services have also been granted VAT exemptions to further ease burdens on young families.
Demographers note that while these “carrot-and-stick” approaches signal Beijing’s urgency, deeper issues like high education costs, workplace pressures, and shifting social attitudes toward marriage and childbearing may limit their impact on reversing the demographic trend.
