By Bloomberg December 2, 2025, 12:37:16 PM IST (Published)
China will impose a 13% value-added tax on contraceptive drugs and devices — including condoms — for the first time in three decades, its latest effort to reverse plunging birth rates that threaten to slow the economy further. The items had been VAT-exempt since 1993, when a strict one-child policy actively promoted birth control.
Under the revised Value-Added Tax Law, the VAT on contraceptives takes effect in January. The revision also exempts child-care services — from nurseries to kindergartens — along with elder-care institutions, disability service providers and marriage-related services, part of a broader pivot from limiting births to encouraging them.
China’s population has fallen for three consecutive years, with just 9.54 million births in 2024 — about half the roughly 18.8 million registered nearly a decade ago when the one-child policy was lifted. Beijing has responded with pro-natalist measures such as cash handouts, improved childcare, extended maternity and paternity leave, and guidance aimed at reducing non‑medically necessary abortions. These contrast with the coercive reproductive controls of the one‑child era, when abortions and sterilizations were routinely enforced.
A key obstacle remains the high cost of raising children. A 2024 report by the YuWa Population Research Institute estimates the cost to raise a child through age 18 at more than 538,000 yuan ($76,000), a sum deterring many young adults amid a slow economy and unstable job market. Shifting social values also lead some to prioritize career and financial stability over starting a family.
“Removing the VAT exemption is largely symbolic and unlikely to have much impact on the bigger picture,” said He Yafu, a demographer with YuWa. “Instead, it reflects an effort to shape a social environment that encourages childbirth and reduces abortions.”
Public reaction was swift on the microblogging site Weibo, where some users warned that higher condom prices could increase unplanned pregnancies and sexually transmitted infections. HIV — which has fallen in many parts of the world — has risen sharply in China amid persistent stigma and limited sex education. China’s Center for Disease Control and Prevention reports the rate of reported HIV and AIDS cases rose from 0.37 per 100,000 people in 2002 to 8.41 in 2021.
“When considering the rising HIV infections among young people, raising prices like this might not be a good idea,” one Weibo user wrote. Others mocked the tax as ineffective at changing childbearing attitudes: “If someone can’t afford a condom, how could they afford raising a child?”
