From the first day of 2026, people in China will pay a 13% sales tax when buying contraceptives, while childcare services will be exempt, in a strategy by the world's second-largest economy to boost the birth rate.

A reform to the tax system announced at the end of 2024 removes many of the exemptions that have been in place since 1994, when China still enforced its one-child policy.

The reform also exempts marriage-related services and elder care from VAT (value-added tax), as part of a broader effort that includes increasing maternity and paternity leave days, as well as cash financial support.

Faced with an aging population and a sluggish economy, Beijing has been trying hard to encourage young Chinese to marry and couples to have more. children.

Official figures show that China's population has declined for three consecutive years, with just 9.54 million babies born in 2024. That's almost half the number of births recorded a decade ago, when China began relaxing its rules on how many children one could have.

However, the tax on contraceptives—including condoms, pills, and The rise in the price of birth control devices has generated concerns about unwanted pregnancies and HIV rates, as well as ridicule Some point out that it would take more than expensive condoms to persuade them to have more children. As one retailer urged consumers to stock up before the price increase, one social media user joked, “Now I'm going to buy condoms for life.” People can realize the difference between the price of a condom and the cost of raising a child, another person wrote. China is one of the most expensive countries in the world to raise children, according to a 2024 report by the YuWa Population Research Institute in Beijing. Costs are rising due to school expenses in a highly competitive academic environment and the challenge for women in juggling work and childcare, the study noted. The economic slowdown, caused in part by the real estate crisis that has impacted savings, has left families, and especially young people, feeling uncertain or less secure about their future. “I have one child and I don't want any more,” said Daniel Luo, 36,who lives in the eastern province of Henan. He says he is not worried about rising prices. “A box of condoms might cost five yuan more, maybe 10, 20 at most. Over the course of a year, that's only a few hundred yuan, completely affordable.”

“It's like when subway fares go up. When they go up by a yuan or two, people who take the subway don't change their habits. You still have to take the subway, right?”

But the costs could become a problem for others, and that's what worries Rosy Zhao, who lives in the city of Xi'an in central China.

She argues that making contraception, which is a necessity, more expensive would mean that students or those with financial difficulties “will take risks.”

That would be “potentially the most dangerous outcome” of this policy, she added.

Observers seem to be divided on the aim of the tax reform. The idea that raising the tax on condoms will impact birth rates is “overthinking,” says demographer Yi Fuxian of the University of Wisconsin-Madison. He thinks Beijing is keen to raise taxes “by any means necessary” as it grapples with a slumping housing market and mounting national debt. China's VAT revenue, at nearly $1 trillion, accounted for about 40% of the country's tax revenue last year. The move to tax condoms is “symbolic” and reflects Beijing's intention to encourage citizens to raise the “shockingly low” fertility rates, said Henrietta Levin of the Center for Strategic and International Studies. What's also complicating the efforts, she adds, is that many of the policies and subsidies will have to be implemented by indebted provincial governments, and it's unclear whether they have sufficient resources in their budgets.

China's strategy to urge people to have more children also risks backfiring if people feel the government is being "too intrusive" about what is a deeply personal choice, Levin said.

There have recently been media reports that women in some provinces have received calls from local officials asking about their menstrual cycles and plans to have children. The local health office in Yunnan province said that this type of information was needed to identify pregnant women.

But this has not done any favors for the government's image, Levin concludes. "The (Communist) party can't stop interfering in every decision that is in its interest. So it ends up somehow becoming its own worst enemy."

Observers and the women themselves argue that the country's male-dominated leadership fails to understand the social changes underpinning these broader shifts, which are not unique to China.

Countries in the West and even those in the region, such as South Korea and Japan, have struggled with age birth rates as their populations.

Part of the reason is the burden of childcare, which falls disproportionately on women, according to research. But there are other changes too, such as the decline in marriages, even on dating sites.

China's measures miss the real problem: the way young people interact today, increasingly avoiding genuine human connections, argues Luo, the father of a child who lives in Henan.

He points to the increased tax on sex toys in China, which he sees as a sign that "people are satisfying themselves" because "interacting with another person has become a greater burden."

Being online is easier and more comforting, he explains, because "the pressure is real."

"Young people today are under much more social stress than people were 20 years ago. It's true, materially they are better off, but the expectations placed on them are much higher. Everyone is simply exhausted."

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