China has imposed a 13 per cent value-added tax (VAT) on condoms, contraceptive drugs, and devices as part of renewed efforts to reverse its declining birth rate. The policy, which took effect on January 1, 2026, ends more than three decades of tax exemptions on contraceptive products.
The move comes as the world’s second-largest economy records a steady population decline, with the country’s population shrinking for the third consecutive year since 2024, raising concerns over the long-term impact on its labour force and economic growth.
Following decades of strict population control under the one-child policy enforced between 1980 and 2015, Chinese authorities have shifted focus to encouraging childbirth and supporting young families. As part of broader measures, the government has introduced incentives including a 90 billion yuan (about $12.7 billion) childcare subsidy programme and an annual subsidy of 3,600 yuan for each child under the age of three in 2025. In addition, national health insurance schemes will now cover childbirth-related expenses to further ease the financial burden on prospective parents.