China is to impose a value-added tax on contraceptive drugs and devices — including condoms — for the first time in three decades, its latest bid to reverse plunging birthrates that threaten to further slow its economy.
Under the newly revised Value-Added Tax (VAT) Law, consumers are to pay a 13 percent levy on items that had been VAT-exempt since 1993, when China enforced a strict one child policy and actively promoted birth control.
At the same time, the revision carves out new incentives for prospective parents by exempting childcare services — from nurseries to kindergartens — as well as elder-care institutions, disability service providers and marriage-related services. The changes take effect next month.
Photo: EPA
They reflect a broader policy pivot, as a rapidly aging China shifts from limiting births to encouraging people to have more children. The population has shrunk for three consecutive years, with just 9.54 million births last year — barely half of the 18.8 million registered nearly a decade ago, when the one child policy was lifted.
Beijing has rolled out a series of pro-natalist policies in response, from offering cash handouts to improving childcare services, and extending paternity and maternity leave. The country has also announced guidelines to reduce the number of abortions that are not deemed “medically necessary” — in sharp contrast to the coercive reproductive controls of the one child era, when abortions and sterilizations were routinely enforced.
Beijing’s attempts to reverse its birthrate are running into a basic hurdle: China is one of the priciest countries in which to bring up children, a report last year by the YuWa Population Research Institute in Beijing.
Raising a child through age 18 costs more than an estimated 538,000 yuan (US$76,000), a price at which many young adults are balking amid a slow economy and unstable job market. As societal values shift, others are choosing to invest in their own stability and careers over a family life.
Still, authorities are increasingly focused on measures meant to shift social attitudes toward childbirth — even when the direct effects might be limited.
“Removing the VAT exemption is largely symbolic and unlikely to have much impact on the bigger picture,” said He Yafu, a demographer with YuWa. Instead, “it reflects an effort to shape a social environment that encourages childbirth and reduces abortions.”
The VAT also comes as HIV — which has been decreasing worldwide — increases sharply in China, as stigma and limited sex education continue to hinder public understanding. Most new cases of the illness are linked to unprotected sex.
From 2002 to 2021, the rate of reported HIV and AIDS cases rose from 0.37 per 100,000 people to 8.41, China’s Center for Disease Control and Prevention said.
The extra cost quickly sparked debate on Chinese microblogging site Weibo, with some users worrying not just about the potential for unplanned pregnancy, but whether sexually transmitted diseases could spread more quickly if people were using fewer condoms.
“When considering the rising HIV infections among young people, raising prices like this might not be a good idea,” one user wrote. “It’s a poorly considered approach.”
Others mocked the tax as ineffective — arguing that higher prices would do little to change attitudes toward childbearing.
“If someone can’t afford a condom, how could they afford raising a child?” one person asked.
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