China’s Strategy to Increase Birth Rates: Contraceptive Tax and Affordable Childcare

Beginning January 1, residents of China will encounter a 13% sales tax on contraceptive products, while childcare services will enjoy tax exemptions. This initiative is part of a broader strategy aimed at reversing declining birth rates within the world’s second-largest economy.

The tax reform, revealed late last year, eliminates many tax exemptions that have been in effect since 1994, a period when China strictly enforced its one-child policy. The overhaul also includes the removal of value-added tax (VAT) on services related to marriage and elder care, alongside other measures intended to support families, such as extended parental leave and direct financial assistance.

Confronted with a rapidly aging population and a sluggish economic environment, the Chinese government has intensified its efforts to motivate younger citizens to marry and start families. Recent statistics indicate that for the past three years, China’s birth rate has steadily declined, with only 9.54 million births recorded in 2024, a figure that is approximately half of the births recorded a decade earlier when the country began relaxing its childbearing restrictions.

The newly imposed tax on contraceptives, which includes items like condoms and birth control pills, has raised concerns regarding potential increases in unintended pregnancies and sexually transmitted infections, including HIV. Many have reacted with skepticism, suggesting that merely increasing the cost of condoms will not be sufficient to encourage childbearing.

In response to the impending price increase, one retailer advised customers to purchase condoms in advance, while a social media user humorously remarked, “I’ll buy a lifetime’s supply now.” Another commenter pointed out that the financial difference between condoms and raising a child is starkly significant.

According to a 2024 study from the YuWa Population Research Institute in Beijing, China ranks among the most expensive nations for raising children. The high costs are driven by competitive educational expenses and the challenges women face in balancing career and family responsibilities.

The ongoing economic downturn, exacerbated by a property market crisis affecting savings, has fostered uncertainty among families and especially younger generations regarding their futures. “I have one child and don’t plan on having more,” stated Daniel Luo, a 36-year-old resident of Henan province.

He likened the condom tax to minor fare increases on public transportation, suggesting that such changes do not significantly alter habitual behaviors. “An increase of five or ten yuan for a box of condoms is manageable over a year, amounting to just a few hundred yuan,” he noted.

However, for others, the increased costs might pose a barrier. Rosy Zhao, a resident of Xi’an, expressed concern that raising the price of essential contraception could lead financially struggling individuals or students to take risks.

Observers are divided on the effectiveness of the tax overhaul in achieving its intended goals. Demographer Yi Fuxian from the University of Wisconsin-Madison suggested that the notion of a condom tax impacting birth rates may be an overestimation, arguing that the government is primarily focused on maximizing tax revenue amidst challenges like a sluggish housing market and mounting national debt.

Last year, nearly $1 trillion in VAT revenue constituted about 40% of China’s total tax income. Henrietta Levin from the Center for Strategic and International Studies described the decision to tax condoms as largely symbolic, reflecting Beijing’s attempts to address the country’s alarmingly low fertility rates.

Levin pointed out that the implementation of policies and subsidies relies heavily on provincial governments, many of which are operating under significant debt constraints, raising questions about their ability to allocate adequate resources.

China’s current strategies for encouraging childbirth may backfire if citizens perceive the government as overly intrusive in personal matters. Recent reports have highlighted instances of women being contacted by local officials inquiring about their menstrual cycles and family planning, with health authorities in Yunnan province claiming such information is necessary to identify expectant mothers.

This approach has not bolstered the government’s public image, as Levin remarked, “The Communist Party tends to involve itself in every decision that it deems important, often becoming its own worst enemy.”

Many observers, including women themselves, argue that the predominantly male leadership in China fails to grasp the societal shifts that contribute to declining birth rates, a trend not unique to China. Countries across the globe, including those in the West and nearby nations such as South Korea and Japan, are grappling with similar issues of low fertility rates amid aging populations.

Research indicates that the burden of childcare disproportionately affects women, contributing to these trends. Additionally, there are noticeable changes in social dynamics, such as declining rates of marriage and dating.

According to Luo from Henan, current policies do not address the fundamental issue: the changing nature of interpersonal relationships among young people. He pointed to increasing sales of sex toys in China, suggesting that many are opting for self-satisfaction as genuine human connections become increasingly burdensome.

Luo also noted that being online offers a more comfortable escape, exacerbated by the intense pressures young people face today, which are significantly higher than those experienced two decades ago. While material circumstances may have improved, the expectations placed upon the younger generation have become overwhelmingly demanding, leading to widespread exhaustion.