China has started a new 13 per cent sales tax on contraceptives, including condoms, birth control pills, and devices, from January 1, 2026. At the same time, the government has exempted childcare services, marriage-related services, and elderly care from value-added tax (VAT). These changes are part of a wider tax reform announced in late 2025, which removes exemptions that had been in place since 1994. The authorities say the tax overhaul is meant to support families and address the country’s falling population and ageing society.
Despite these efforts, China continues to struggle with declining birth rates. The population has been shrinking for several years, and the country faces the challenge of supporting a rapidly growing number of elderly citizens. People over the age of 60 now make up more than 20 per cent of China’s 1.4 billion population, and this is expected to rise sharply by 2100, according to United Nations projections.
China’s population policies have changed dramatically over the last 40 years. In 1980, the government introduced the one-child policy to control population growth, which it feared could harm economic development and poverty reduction. This policy was enforced through propaganda, fines, and in some cases, forced abortions and sterilizations.
By 2016, the government realized that low birth rates and a shrinking workforce could hurt long-term economic growth. This led to the formal end of the one-child policy. Over the years, China has introduced incentives to encourage larger families, such as longer maternity leave, cash allowances, housing support, and tax breaks. However, these measures have not reversed the declining birth rate.
High costs are a major reason why couples are hesitant to have children. China is considered one of the most expensive countries in the world to raise a child, according to a 2024 report by the YuWa Population Research Institute in Beijing. Education is one of the biggest expenses, and families are also worried about the cost of housing, healthcare, and general living expenses.
Economic uncertainty has made the situation worse. A slowdown in the economy, partly due to a crisis in the property sector, has reduced household savings and made many families unsure about their financial future. Experts also point to high youth unemployment and unequal childcare responsibilities, which mostly fall on women, as factors that discourage parenthood.
The decision to tax contraceptives has drawn criticism. Some worry that higher prices for condoms and other birth control methods could lead to unwanted pregnancies and increase the risk of HIV and other sexually transmitted infections. Critics also argue that taxing contraceptives is unlikely to convince couples who are already unsure about having children.
Local governments have tried to encourage families in other ways, such as offering tax breaks, housing support, and cash incentives. However, reports have surfaced that some women are being contacted by community workers to discuss their plans for having children. These actions have raised concerns about privacy and potential coercion.
Experts say that raising birth rates requires addressing economic, social, and cultural issues, not just offering incentives. Policies must reduce the financial burden of children, improve job opportunities for young people, and make childcare responsibilities more equal between men and women. Without these changes, it will be difficult for China to reverse its declining population trend.
China’s current challenge highlights the limits of pro-birth policies. While the government wants families to have more children, high costs, economic insecurity, and social pressures make parenthood difficult for many couples. Taxing contraceptives while offering incentives elsewhere shows the complexity of managing population policies in a modern society.
In conclusion, China is trying to encourage families to have more children through tax reforms, cash incentives, and social support. Yet, population decline continues because of high costs, economic uncertainty, and social pressures. Experts warn that without addressing these deeper issues, pro-birth policies alone will not be enough to stop the population from shrinking and ageing rapidly.
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