China Will Tax Contraceptives in a Bid to Improve Birth Rates

"China aims to impose a unique strategy to address a falling birth rate that threatens its long-term stability. As of January 1, 2026, the government will levy a 13 percent value-added tax (VAT) on various contraceptives, including condoms. The decision amends the Value Added Tax Law, which in 1993 exempted birth control products from taxation. At the time, the measure was part of China's effort to contain its accelerating population growth."

"The National Bureau of Statistics reported that in 2024 China recorded a slight uptick with the birth of 9.54 million babies, around 520,000 more than in 2023. However, the birth rate per 1,000 stood at 6.77 last year, matching the second-lowest level observed in the history of the People's Republic of China, in 2022. The lowest rate was in 2023 at 6.39 per 1,000. The country's total population has been declining steadily for the past three years."

"Specialists warn that this trend will have a profound effect on the economy of America's main rival. A report by Oxford Economics notes that potential output growth (an indicator measuring the maximum expansion that can be achieved without generating inflationary pressure) could fall below 4 percent in the 2030s due to a shrinking labor force and a slowdown in productivity."

China will levy a 13 percent value-added tax on various contraceptives, including condoms, starting January 1, 2026, ending a tax exemption created in 1993. The 1993 exemption had supported efforts to contain population growth but now conflicts with policies addressing a rapidly aging population and falling birth rates. In 2024 China recorded 9.54 million births and a birth rate of 6.77 per 1,000, matching the second-lowest historical level, while the total population declined year-on-year to about 1.408 billion. Oxford Economics warns potential output growth could fall below 4 percent in the 2030s due to a shrinking workforce and slower productivity. Since 2021 authorities launched initiatives to reverse population decline.

Read at WIRED