Business & Economics
China Scraps Contraceptive Tax Break, Slaps 13 % VAT to Fight Population Slide
Effective 1 Jan 2026 Beijing ended a 30-year tax exemption on condoms and birth-control drugs, making them 13 % costlier while expanding childcare tax breaks, in a bid to arrest China’s three-year population decline.
Focusing Facts
- The new VAT law reclassifies contraceptives from “basic health products” to ordinary consumer goods, imposing the standard 13 % rate that had been waived since 1994.
- China logged only 9.54 million births in 2024—about half the 2016 figure—marking the third straight year of net population shrinkage.
- Parents of children under three became eligible in 2025 for an annual cash allowance of 3,600 yuan per child, exempt from income tax.
Context
States have oscillated between discouraging and promoting births before. France introduced family allowances in 1932 after its First-World-War manpower shock; Singapore swung from ‘Stop-at-Two’ in the 1970s to cash bonuses for third babies by 1987. China’s volte-face is sharper: within a single lifetime it has moved from forced one-child limits (1980-2015) to nudging conceptions by taxing condoms. The measure fits a wider global pattern of sub-replacement fertility, especially in East Asia, where South Korea’s rate already sits at 0.7. Yet taxing birth control tinkers at the margin of a structural challenge rooted in housing costs, gender inequality and stalled income growth. On a century scale, whether China can maintain a productive labour pool will shape everything from global supply chains to its fiscal capacity to care for an estimated 400 million elderly by 2050—suggesting that this small tax tweak, though symbolically dramatic, may be remembered more as a signpost of demographic anxiety than as a cure.
Perspectives
Right-leaning Western commentary outlets
Daily Mail Online, Zero Hedge — They depict the condom tax as a heavy-handed, almost absurd U-turn that punishes safe sex while revealing Beijing’s desperation after the failures of its one-child policy. By spotlighting ridicule on Chinese social media and stressing authoritarian overreach, they play to an audience primed to distrust the CCP and may exaggerate the measure’s coercive intent while glossing over other pro-natal incentives also listed in the same policy package.
Global wire-service based outlets reprinting Reuters copy
U.S. News & World Report, The Star, ThePrint — Their reports frame the VAT change as one more technocratic step in a broader, government-led effort to stabilise China’s population, laying out background data and official quotes without overt judgment. The just-the-facts approach can obscure public backlash or ethical concerns, implicitly normalising Beijing’s policy logic by giving it equal weight to expert commentary in a neutral tone.
Indian national media
India Today, The Times of India — They cast the move as evidence of China’s deep demographic anxiety, warning that the country risks “getting old before it gets rich” and underscoring how previous relaxations failed to spark a baby boom. Given geopolitical rivalry, the outlets highlight China’s missteps and looming decline, a narrative that can feed domestic schadenfreude and downplay similar fertility challenges facing India itself.