China’s Condom Tax: Why a Bid to Boost Births May Backfire
China’s condom tax comes after one-child, two-child, and three-child policies, creating an ironic barrier as the government tries to increase births.
China’s Condom Tax: A Policy Likely to Harm Public Health More Than Help Fertility
China’s decision to reintroduce a 13 per cent value-added tax (VAT) on condoms, birth control pills and other contraceptives from 1 January 2026 marked the end of a roughly 30-year tax exemption for these products. The change was woven into a broader update of the national VAT law, which removed exempt status from contraceptives while extending relief for services such as childcare and elder care. The adjustment has provoked widespread discussion because it comes at a time when Beijing is openly seeking to encourage more births. For decades the world’s most populous country, China now faces the social and economic consequences of a declining birth rate, and the imposition of tax on contraceptives has become a flashpoint in debates over how best to address those challenges.
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Faced with an ageing population and a slowing economy, Chinese policymakers have intensified efforts to persuade young people to marry and have children. The fertility rate in China has fallen to around one child per woman, far below the replacement level of about 2.1, a situation that demographers describe as structurally problematic for long-term population stability. In this context, Beijing has deployed an array of measures intended to boost fertility, ranging from cash subsidies and extended maternity and paternity leave to tax incentives linked to child-rearing. Against this backdrop, the decision to tax condoms and contraceptives is presented by some authorities as part of a broader approach to signal a shift away from fertility limitation, though its logic and likely efficacy remain contested.
Under China’s previous VAT regime, contraceptives — including pills, condoms and other devices — were exempt from tax when the nationwide VAT system was introduced in 1994. That exemption was originally aligned with state family-planning objectives at the time, which emphasised birth limitation rather than population growth. The revised tax law simply did not carry forward the exemption for contraceptives, bringing them into the standard 13 per cent VAT category that applies to most consumer goods. The practical effect is to make contraceptives more expensive at a time when the government is attempting to encourage higher birth rates, an outcome that has drawn scrutiny from public-health advocates and economists alike.
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China’s Condom Tax and the Paradox of Family Planning
The situation carries a particular historical irony because China’s state-run family-planning system once ensured broad distribution of contraceptives through official channels. During the era of strict population control, including the one-child policy, free condoms and other birth control methods were disseminated via family-planning clinics, work units and rural health programmes. Policymakers assumed that those who needed contraception would generally receive it through state-run mechanisms, and commercially marketed products were regarded as supplementary, private goods subject to taxation. That underlying assumption now collides with the government’s pronatalist messaging, highlighting a tension between past and present policy paradigms.
China’s fertility challenge cannot be understood in isolation from the legacy of decades of restrictive family-planning policies. Births in China have plunged far below the level needed to sustain the population, a trend driven by the combined effects of the former one-child policy, rapid urbanisation, rising costs of housing and education, intense work cultures and shifting personal aspirations that make marriage and raising a family not a worthy proposition for many young adults. Even after the formal end of the one-child policy, and the relaxation of birth limits first to two children and then to three, many couples either cannot afford additional children or choose not to have them. These forces have resulted in an ageing population, a shrinking workforce and rising dependency ratios, with significant implications for economic growth, pensions and healthcare systems as demographic pressures intensify.
To address these structural issues, China has deployed a range of financial incentives. Last year, the government allocated tens of billions of yuan to a national childcare programme that offers an annual payment of about 3,600 yuan (roughly US$500) for each child under the age of three. This measure is part of a broader policy shift from restricting births to encouraging them, with the aim of reducing the financial burden on families and signalling sustained, long-term support for child-rearing. Such programmes acknowledge that high child-rearing costs, delayed marriage, and low fertility intentions are central to the demographic decline and that targeted fiscal support is needed to make parenthood financially viable for young couples.
Official statistics reveal the urgency of China’s demographic predicament. In 2024, the number of births fell to just 9.54 million — roughly half the figure recorded a decade earlier when restrictions on family size were eased — and the overall population declined for the third consecutive year. These figures reflect not only the cumulative impact of past policies but also deep-seated economic and social disincentives to child-bearing. High costs, long working hours, job insecurity, delayed marriages and evolving social values have combined with a diminishing population of women of child-bearing age to suppress fertility, suggesting that simply removing formal limits on family size was insufficient to reverse entrenched low-fertility behaviour.
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The evolution of China’s family-planning policy demonstrates a striking policy inconsistency over time. For decades, the one-child policy was the cornerstone of national demographic policy, sharply reducing fertility and remaining in effect for more than three decades. After its official end in 2016, the government gradually relaxed restrictions: first permitting two children and then, in 2021, adopting a three-child policy. Yet these successive reversals have done little to stimulate a sustainable increase in births. The very policy apparatus that once drove fertility down has left an enduring imprint on social behaviour and expectations about family size that current pronatalist measures struggle to overcome.
China’s Condom Tax and Its Unintended Consequences
China’s condom tax is being criticised by public-health professionals, social scientists and civil society advocates who argue that the policy could have unintended negative consequences. By raising the price of a basic preventive tool, the tax risks reducing access to effective contraception, particularly among young people and low-income groups. Critics contend that this could discourage safe sex practices and increase the incidence of unintended pregnancies and sexually transmitted infections — including HIV — in ways that would place additional burdens on the healthcare system. They also note that making contraceptives more expensive appears to contradict broader public-health objectives and disproportionately affects vulnerable populations in the name of demographic engineering rather than evidence-based policy.
Looking ahead, the long-term effects of China’s condom tax are likely to be more complex than its proponents suggest. By increasing the cost of contraceptives, the policy may undermine public-health goals without significantly influencing couples’ decisions about child-bearing. Research and demographic experience in other low-fertility societies indicate that fertility intentions are shaped more by economic security, social support and working conditions than by the cost of contraception. In this light, China’s condom tax could signal a policy approach that prioritises symbolic gestures over substantive reforms, potentially weakening trust in population policy while failing to achieve its stated objective of boosting birth rates.
What China instead needs is a comprehensive public-health and family support strategy that reduces both financial and social barriers to reproductive health and child-rearing. This would mean making condoms and other contraceptives tax-free and widely available to protect health, while focusing fertility policy on long-term measures that make having children affordable and compatible with contemporary life. Sustained support for childcare, housing, education, parental leave for both parents, predictable working hours and job security — especially for women — will be essential. Recognising that people choose to have children only when doing so does not jeopardise their economic stability or personal autonomy should be at the heart of any effective demographic policy going forward.
