China has ended a tax exemption on contraceptive medicines and devices that had been in place for more than 30 years, effective January 1, as part of efforts to address its slowing birth rate, according to a report by Reuters.
As a result, condoms and birth control pills are now subject to a 13% value-added tax, the same rate applied to most consumer products.
What’s behind Beijing’s new contraceptive tax?
The decision comes at a time when Beijing is grappling with persistently low birth rates in the world’s second-largest economy. China’s population declined for a third straight year in 2024, and experts have warned that the downward trend is likely to continue.
In response, authorities have introduced a range of measures aimed at encouraging childbirth, including exempting childcare subsidies from personal income tax and launching an annual childcare allowance last year. Other “fertility-friendly” steps rolled out in 2024 included calls for colleges and universities to offer “love education” that promotes positive views on marriage, relationships, childbearing, and family life, Reuters reported.
Top leaders again pledged last month at the annual Central Economic Work Conference to promote “positive marriage and childbearing attitudes” to stabilize birth rates.
“One-child policy”
China has historically ranked among the world’s most populous countries, surviving invasions, floods, and other natural calamities while supporting large populations sustained by rice cultivation in the south and wheat farming in the north, according to a report by the Associated Press.
After World War II and the Communist Party’s takeover in 1949, large families became common again, leading to the population doubling within three decades. This growth occurred despite the deaths of tens of millions during the Great Leap Forward, which aimed to transform agriculture and industry, and the Cultural Revolution that followed soon after.
Following the end of the Cultural Revolution and the death of Mao Zedong, Communist officials grew concerned that China’s population growth was exceeding the nation’s capacity to feed itself. In response, they introduced the harsh “one-child policy.”
Although it was never formally enacted into law, women were required to seek official approval to have a child, and those who violated the policy risked forced late-term abortions and sterilizations, steep financial penalties, and the denial of identification documents for their children—effectively rendering them without legal status, AP reported.
Rural China preferred male offspring
According to an AP report, rural China, where the preference for male offspring was especially strong, and two children were still ostensibly allowed, became the focus of government efforts, with women forced to present evidence they were menstruating and buildings emblazoned with slogans such as “have fewer children, have better children.”
The government tried to curb the practice of selectively aborting female fetuses, but because abortions were legal and easily accessible, illegal operators running unauthorized sonogram services thrived. This contributed significantly to China’s skewed sex ratio, with millions more boys being born than girls, raising concerns about potential social instability among the country’s large population of unmarried men, AP reported.
2022
More disturbing for the government was the drastically falling birthrate, with China’s total population dropping for the first time in decades in 2022 and China being narrowly overtaken by India as the world’s most populous nation the following year. A rapidly aging population, declining workforce, lack of consumer markets and migration abroad are putting the system under severe pressure.
Fertility rate in China from 2000 to 2022 with forecasts until 2050
China’s total fertility rate rose slightly in 2022, increasing by 0.02 children per woman, or about 1.72 per cent, to reach 1.18 children per woman.
What is the total fertility rate?
The total fertility rate represents the average number of children a woman of reproductive age—typically between 15 and 44 years—would be expected to have over her lifetime. Like life expectancy, it is a statistical estimate based on a hypothetical cohort and assumes that existing age-specific fertility patterns remain unchanged throughout a woman’s reproductive years.
Population growing old
While China continues to ramp up spending on its military and high-profile infrastructure projects, the country’s already fragile social security system is under strain. Growing numbers of citizens are opting out of contributions to the underfunded pension system, adding to concerns about its sustainability, according to reports.
Already, more than one-fifth of the population is aged 60 or over, with the official figure given as 310.3 million or 22% of the total population.
By 2035, this number is forecast to exceed 30%, sparking discussion of changes to the official retirement age, which is one of the lowest in the world. With fewer students, some vacant schools and kindergartens are meanwhile being transformed into care facilities for older people.
(With insights from agencies)
