China’s Contraceptive Tax and the Hard Limits of Pro-Birth Policies

China has begun 2026 with a policy move that has drawn global attention — a 13% sales tax on contraceptives, including condoms, birth control pills and devices. Introduced alongside tax exemptions for childcare, elderly care and marriage-related services, the decision reflects Beijing’s intensifying push to reverse a demographic slide that years of incentives have failed to arrest. The move, however, has also underlined the limits — and risks — of state-led pro-birth strategies.

What exactly has China changed in its tax regime?

From January 1, contraceptives that were exempt from value-added tax (VAT) for over three decades are now subject to a 13% levy. The exemption dated back to 1994, when China was firmly enforcing its one-child policy. The revised structure, announced in late 2025, removes these legacy concessions while extending VAT relief to childcare services, elderly care, and marriage-related expenses.

Officials say the overhaul aligns fiscal policy with broader demographic objectives — lowering the cost of raising children while discouraging practices seen as reducing fertility. The changes were first reported by the BBC.

A decade since the end of the one-child policy

The timing is symbolic. January 2026 marks ten years since China formally abandoned the one-child policy, introduced in 1980 to curb population growth amid fears of economic strain. For decades, enforcement involved fines, surveillance, and in some cases forced abortions and sterilisations.

By the early 2010s, however, the state began acknowledging the unintended consequences: shrinking family sizes, a rapidly ageing population, and a workforce that would soon start contracting. The policy was officially scrapped in 2016, with limits gradually relaxed to allow two and later three children per couple, a shift documented extensively by CNN.

Why China’s pro-birth push is failing to lift numbers

Despite policy reversals and incentives, births have continued to fall. China’s population declined for the third consecutive year in 2024, according to the Reuters, with demographers warning that the trend is unlikely to reverse soon.

At the same time, ageing is accelerating. People above 60 now account for over a fifth of China’s 1.4 billion population. Projections by the United Nations suggest this share could approach 50% by the end of the century — a demographic structure that threatens growth, fiscal stability and social welfare systems.

The real deterrent: cost, uncertainty and gender burden

High child-rearing costs remain the biggest barrier. A 2024 study by the YuWa Population Research Institute in Beijing found China among the world’s most expensive countries to raise a child, with education costs forming a disproportionate share.

Economic uncertainty has compounded the problem. A prolonged slowdown and property sector crisis have eroded household savings, making long-term family planning riskier. Beyond finances, experts point to structural issues — high youth unemployment, intense work cultures, and the unequal burden of childcare that continues to fall largely on women, often at the cost of careers.

Why taxing contraceptives has triggered backlash

The contraceptive tax has drawn criticism for targeting symptoms rather than causes. Public health experts warn that higher condom prices could increase unwanted pregnancies and raise the risk of sexually transmitted infections, including HIV — without meaningfully boosting planned births.

Online, the move has been widely ridiculed, with critics arguing that couples delaying or rejecting parenthood due to cost, job insecurity or lifestyle choices are unlikely to be swayed by marginal price changes in contraception.

The risk of policy overreach

China’s pro-natalist drive has already involved cash incentives, housing support, extended maternity leave and tax breaks at local levels. Reports of community workers calling women to ask about childbearing plans have raised fears of intrusive governance.

Analysts caution that if demographic anxiety leads to coercive or moralising policies, it could backfire — deepening resistance rather than rebuilding trust. China’s demographic challenge, many argue, is less about fertility intent and more about the social and economic conditions that shape it.

The contraceptive tax, in that sense, has become a symbol of a deeper dilemma: while the state can tweak incentives and penalties, reversing decades of social change — urbanisation, education, women’s workforce participation — may lie beyond the reach of fiscal tools alone.