China’s struggle with low fertility rates has led to a controversial new policy aimed at addressing the demographic challenge. In a surprising move, Chinese authorities have imposed a 13% value-added tax on contraceptives, including condoms and birth control pills, starting January 1. The decision seeks to double the current fertility rate of 1.0 children per woman, a figure that is significantly below the 2.1 replacement rate needed to maintain population stability.
While contraceptives are now taxed, services like childcare and matchmaking remain exempt from this duty. This shift follows China’s recent financial commitment of 90 billion yuan (approximately US$12.7 billion) to a national childcare program. This initiative offers families a one-time payment of around 3,600 yuan (over $500) for each child aged three or under.
Experts remain skeptical about the potential impact of these measures. Dudley Poston, a demographer with nearly 40 years of experience studying China’s population trends, believes these efforts may not be enough to reverse the declining fertility trend. He notes, “Past attempts by the country’s communist government to reverse slumping fertility rates through policies encouraging couples to have more children have not worked.”
The financial impact of the contraceptive tax appears minimal. A packet of condoms, typically costing about 50 yuan (around $7), and a month’s supply of birth control pills, averaging 130 yuan ($19), will see only a slight price increase. In contrast, the cost of raising a child in China is estimated at approximately 538,000 yuan (over $77,000) to age 18, with urban expenses being even higher. A father interviewed by the BBC expressed little concern over the price hike, stating, “A box of condoms might cost an extra five yuan, maybe 10, at most 20. Over a year, that’s just a few hundred yuan, completely affordable.”
Challenges of Pronatalist Policies
China is not alone in its quest to boost fertility rates. Other nations, like Singapore and South Korea, have implemented pronatalist policies with limited success. Singapore’s efforts, including paid maternity leave and child care subsidies, have not significantly moved its fertility rate, which remains at a low 1.2. Even unconventional strategies, such as limiting small apartment constructions to promote family-friendly living spaces, have fallen short.
In South Korea, despite substantial government spending exceeding $200 billion since 2006, the fertility rate has continued its downward trajectory, reaching 0.7 in 2024. These examples underscore the complexity of reversing fertility declines.
Societal Shifts and the ‘Low-Fertility’ Trap
China’s fertility challenges are partly rooted in its historical one-child policy, which successfully reduced fertility rates from over 7.0 in the early 1960s to 1.5 by 2015. Although the policy has been relaxed over the years, first allowing two children per family and then three, the hoped-for baby boom has not materialized. Modern societal changes, including improved educational and career opportunities for women, have played a significant role in this ongoing trend.
The “low-fertility trap” theory suggests that once fertility rates fall below 1.5 or 1.4, it becomes challenging to reverse the decline. This is attributed to changes in living standards and increased opportunities for women. Consequently, experts like Poston argue that China’s current policies, including the contraceptive tax, are unlikely to have a significant impact on raising fertility rates.
