China’s plan to boost birth rates with condom tax and cheaper childcare

Chinese people will pay a 13% sales tax on contraceptives from 1 January, while childcare services will be exempt, as the world’s second-largest economy tries to boost birth rates.

An overhaul of the tax system announced late last year removes many exemptions that were in place since 1994, when China was still enforcing its decades-long one-child rule.

It also exempts marriage-related services and elderly care from value added tax (VAT) – part of a broader effort that includes extending parental leave and issuing cash handouts.

Faced with an ageing population and sluggish economy, Beijing has been trying hard to encourage more young Chinese people to marry, and couples to have children.

Official figures show that China’s population has shrunk three years in a row, with just 9.54 million babies born in 2024. That is around half of the number of births recorded a decade ago, when China started to ease its rules on how many children people could have.

Still, the tax on contraceptives, including condoms, birth control pills and devices, has sparked concern about unwanted pregnancies and HIV rates, as well as ridicule. Some people point out that it would take a lot more than pricey condoms to persuade them to have children.

As one retailer urged shoppers to stock up ahead of the price hike, a social media user joked: “I’ll buy a lifetime’s worth of condoms now.”

People can tell the difference between the price of a condom and that of raising a child, wrote another.

China is one of the most expensive countries in which to raise a child, according to a 2024 report by the YuWa Population Research Institute in Beijing. Costs are pushed up by school fees in a highly competitive academic environment, and the challenge women have juggling work and parenting, the study said.

The economic slowdown, partly brought on by a property crisis that has hit savings, has left families, and especially young people, feeling uncertain or less confident about their future.

“I have one child, and I don’t want any more,” says 36-year-old Daniel Luo, who lives in the eastern province of Henan.

“It’s like when subway fares increase. When they go up by a yuan or two, people who take the subway don’t change their habits. You still have to take the subway, right?”

He says he is not concerned by the price hike. “A box of condoms might cost an extra five yuan, maybe 10, at most 20. Over a year, that’s just a few hundred yuan, completely affordable.”

But cost might be a problem for others, and that’s what worries Rosy Zhao, who lives in the city of Xi’an in central China.

She says making contraception, which is a necessity, more expensive could mean students or those struggling financially “take a risk”.

That would be the policy’s “most dangerous potential outcome”, she added.

Observers appear divided on the aim of the tax overhaul. The idea that a tax hike on condoms will impact birth rates is “overthinking it”, says demographer Yi Fuxian from the University of Wisconsin-Madison.

He believes Beijing is keen to collect taxes “wherever it can” as it battles a housing market slump and growing national debt.

At nearly $1tn (£742bn), China’s VAT revenue made up close to 40% of the country’s tax collection last year.

The move to tax condoms is “symbolic” and reflects Beijing’s attempts to encourage people to lift China’s “strikingly low” fertility numbers, said Henrietta Levin from the Center for Strategic and International Studies.

What is also hampering efforts, she adds, is that a lot of the policies and subsidies will have to be implemented by indebted provincial governments – and it’s unclear if they can spare sufficient resources.

China’s approach to urging people to have children also risks backfiring if people feel the government is being “too intrusive” about what is deeply personal choice, she said.

Recently there have been media reports that women in some provinces have received calls from local officials asking about their menstrual cycles and plans to have children. The local health bureau in Yunnan province said such data was needed to identify expectant mothers.

But this has not helped the government’s image, Ms Levin said. “The [Communist] party can’t help but insert itself into every decision that it cares about. So it ends up being its own worst enemy in some ways.”

Observers and women themselves say the country’s male-dominated leadership fails to understand the social changes underpinning these broader shifts, which are not exclusive to China.

Countries in the West and even those in the region, such as South Korea and Japan, have been struggling to lift birth rates as their population ages.

Part of the reason is the burden of childcare, which disproportionately falls on women, research shows. But there are also other shifts, such as a decline in marriage and even dating.

China’s measures miss the real problem: the way young people interact today, which increasingly avoids genuine human connections, Mr Luo from Henan said.

He points to rising sales of sex toys in China, which he believes is a sign that “people are just satisfying themselves” because “interacting with another person has become more of a burden”.

Being online is easier and more comforting, he says, as “the pressure is real”.

“Young people today deal with way more stress from society than people did 20 years ago. Sure, materially they’re better off, but the expectations placed on them are much higher. Everyone’s just exhausted.”