Beijing is implementing a series of unusual tax changes beginning January 1, 2026, concurrently taxing contraceptives and exempting childcare services in an effort to address the country’s declining birth rate and rapidly aging population. The move, announced late last year, marks a significant shift from china’s decades-long family planning policies and reflects growing economic concerns tied to a shrinking workforce.Experts are already debating the effectiveness of the measures, with some questioning weather financial incentives will overcome deeper societal factors influencing family size.
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- Author, Osmond Chia
- Role, Journaliste économique
- Reporting from, BBC News
- Author, Yan Chen
- Role, BBC News Chine
Beginning January 1, 2026, consumers in China will be subject to a 13% tax on the sale of contraceptives, including condoms.
Simultaneously, childcare services will be tax-exempt, as part of measures taken by the world’s second-largest economy to encourage higher birth rates.
The country’s tax system overhaul, announced late last year, eliminates several exemptions that had been in place since 1994, when China still enforced its decades-long one-child policy.
These measures also include a value-added tax (VAT) exemption for services related to marriage and elderly care.
The changes are part of a broader effort that also includes extending paternity leave and offering financial bonuses.
China’s aging population and economic stagnation have prompted Beijing to incentivize young people to marry and couples to have children.
Official figures show the Chinese population has declined for three consecutive years.
In 2024, 9.54 million babies were born in the country, roughly half the number recorded a decade ago when China began to loosen its family planning regulations.
However, the tax on contraceptives – including condoms, birth control pills, and intrauterine devices – has raised concerns about unwanted pregnancies and HIV rates, and has been widely mocked online.
Some argue that simply increasing the price of condoms won’t be enough to encourage people to have children.
One retailer advised merchants to stock up before the price increase, while one social media user joked about buying a lifetime supply of condoms. Another wrote that people understand the difference between the cost of a condom and the expense of raising a child.
According to a 2024 report by the YuWa Demographic Research Institute in Beijing, China is among the most expensive countries in the world to raise children.
The high cost is attributed to competitive schooling fees and the difficulties women face balancing work and motherhood, according to the study.
The country’s economic slowdown has been partly fueled by a housing crisis that has eroded household savings, creating uncertainty and a lack of confidence about the future among families – particularly young people.
“I have one child and don’t want any more,” said Daniel Luo, 36, who lives in Henan province in eastern China.
“It’s like when the subway fare goes up. If it goes up by one or two yuan, people don’t change their habits. You still need the subway, right?”
Luo said he isn’t worried about the price increase. “A box of condoms might cost five yuan more, maybe ten, at most twenty [roughly $4 to $16]. Over a year, that’s just a few hundred yuan, which is perfectly affordable.”
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But the cost could be a problem for others, like Rosy Zhao, a resident of Xi’an in central China.
She believes increasing the price of contraception, which is essential, could create hardship for students and those facing financial difficulties.
For Zhao, that would be the worst-case scenario of this policy. Observers are divided on the goal of the tax reform.
The idea that raising taxes on condoms will influence the birth rate is an overestimation of the measure, according to Yi Fuxian, a demographer at the University of Wisconsin-Madison.
He believes China is willing to levy taxes “as soon as possible,” facing a shrinking domestic market and growing public debt.
Revenue generated by China’s VAT totaled approximately $1 trillion in 2023, nearly 40% of the country’s total tax revenue. The creation of a condom tax is “symbolic” and reflects Beijing’s desire to encourage the population to increase China’s “alarmingly low” fertility rate, according to Henrietta Levin of the Center for Strategic and International Studies (CSIS).
She explains that these efforts are also hampered by the fact that many policies and subsidies will need to be implemented by provincial governments, which are heavily indebted, and it’s unclear if they will be able to dedicate sufficient resources to these measures.
China’s incentives to have children may also backfire if the population perceives excessive government intrusion into a deeply personal decision, Levin added.
Recently, reports emerged that women in some provinces received calls from local authorities questioning them about their menstrual cycles and plans for children.
The local health bureau in Yunnan province in southwest China said the data was needed to identify pregnant women, but, according to Levin, this did not improve the government’s image. “The Communist Party can’t help but infiltrate every decision it cares about,” she said. “So, in a way, it ends up being its own worst enemy.”
Crédit photo, Getty Images
Observers and women themselves say Chinese leaders, dominated by men, don’t understand the social changes driving these broader shifts. This isn’t unique to China.
Western countries, and even some in the region like Japan and South Korea, are struggling to increase birth rates and slow population aging.
One reason is the burden of raising children, which disproportionately falls on women, according to studies. But other factors are also at play, such as declining marriage rates and even a decrease in dating.
According to Luo, the measures taken by China don’t address the real problem: how young people interact today, increasingly prioritizing authentic human connection.
He points to the increasing sales of sex toys in China. For Luo, this is a sign that “people are content to satisfy themselves,” because “interacting with others has become a chore.”
Connecting online is easier and more comfortable, he says, because “the pressure is real.” “Young people today experience much more stress from society than they did 20 years ago,” Luo explained. “Of course, materially, they live better, but the expectations placed on them are much higher.”
“Everyone is just exhausted.”
