China Implements Tax Changes to Encourage Higher Birth Rates Amid Declining Population

Thu Jan 01 2026 18:24:27 GMT+0200 (Eastern European Standard Time)

In an effort to combat its declining birth rates, China has introduced a 13% sales tax on contraceptives while exempting childcare services from sales tax. This move is part of a broader strategy to encourage couples to have children amidst rising costs of living and societal pressure.

As China faces a significant decline in its birth rates, the government has implemented a new policy that places a 13% sales tax on contraceptives while making childcare services exempt from taxation. This initiative aims to motivate couples to consider having children despite the high costs associated with raising them in a challenging economic environment. Observers express concerns regarding the impact of the contraceptive tax, suggesting it may lead to unintended consequences, and question the effectiveness of policy measures imposed by a government that appears detached from modern social dynamics.

People in China 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 considered 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 face juggling work and parenting, the study said.

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

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 Western world and even those in the region, such as South Korea and Japan, have struggled to lift birth rates amidst similar dynamics.