China will tax contraceptives in a bid to improve birth rates

Amidst a historic decline Birth rates and economic pressures caused by population aging, China It would eliminate the decades-old tax exemption on contraceptives.

China aims to impose a unique strategy to address the low birth rate that threatens its stability in the long term. From January 1, 2026, the government will impose a 13% value-added tax on various contraceptives, including condoms.

The decision amends the Value Added Tax Law, which in 1993 exempted birth control products from taxes. At the time, this measure was part of China’s efforts to contain rapid population growth. However, this policy has become a liability for the world’s second-largest economy, whose growth and stability are under pressure due to a significantly aging population and a declining birth rate.

The National Bureau of Statistics reported that in 2024, China recorded a slight increase with 9.54 million children being born, about 520,000 more than in 2023. However, the birth rate per 1,000 was 6.77 last year, corresponding to 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. 1000.

The country’s total population has declined steadily over the past three years. In 2024, there were just over 1.408 billion people, representing an annual decrease of 1.39 million people. In April 2023, India overtook China as the world’s most populous country.

Experts warn that this trend will have a profound impact on the economy of America’s main competitor. A Report from Oxford Economics He notes that potential output growth (an indicator that measures the maximum expansion that can be achieved without generating inflationary pressures) may fall below 4% in the 2030s due to a shrinking labor force and slowing productivity.

Since 2021, Chinese authorities have launched various initiatives to reverse the trend of population decline. These include what they call the “new culture of marriage and motherhood,” a policy that supports families with a mother, father and three children by granting financial subsidies for each birth. It also expands child care services and extends parental leave. In addition, the country discourages abortions by classifying the procedure as unnecessary treatment.

Despite these efforts, experts believe that China’s chances of reversing its low birth rate are slim, especially since it is one of the most expensive countries to raise children. According to a 2024 analysis by the Yuwa Population Research Institute, the average cost of raising a child until the age of 18 is about 538,000 yen (about $76,000).

In this context, demographer He Yafu explained in statements Quoted from Bloomberg “Repealing the VAT exemption is a largely symbolic effort and is unlikely to generate significant impact at the national level.”

This story originally appeared on WIRED in Spanish It was translated from Spanish.