China Confronts Historic Population Decline with Pro-Natalist Policies and New Condom Tax

China's Population Decline Accelerates

China is facing a significant demographic challenge as its population has declined for three consecutive years, a trend not seen since the severe famine of 1960 during the Great Leap Forward. The National Bureau of Statistics reported a decrease of 850,000 people in 2022, marking the first decline in six decades. This accelerated in 2023 with a drop of 2.08 million, bringing the total population to 1.409 billion. In 2024, the population fell by another 1.39 million to 1.40828 billion. This demographic shift led to India surpassing China as the world's most populous country in 2023.

Despite a slight uptick in the birth rate in 2024 to 6.77 per 1,000 people, potentially influenced by a post-COVID marriage surge and the auspicious 'Year of the Dragon,' the overall trend indicates a persistent decline. The country's fertility rate hovers around 1.0 child per woman, significantly below the 2.1 replacement rate needed to maintain a stable population.

Underlying Factors Contributing to the Decline

The roots of China's declining birth rate are multifaceted, stemming from both historical policies and contemporary societal changes. Key factors include:

• The lasting impact of the stringent one-child policy, implemented from 1979 to 2015, which reshaped attitudes towards family size.
• The escalating costs of raising children, particularly in urban areas, encompassing housing, education, and healthcare.
• Changing social attitudes, with many young people, especially women, delaying marriage and childbirth or choosing to have fewer children.
• Increased participation of women in the workforce and higher education, coupled with concerns about workplace discrimination after childbirth.
• Entrenched gender roles that often place a disproportionate burden of domestic labor and childcare on women.

Beijing's Pro-Natalist Push and the Condom Tax

President Xi Jinping has openly expressed concern over the demographic challenges, acknowledging 'the pressure of a large population and the challenges brought about by the transformation of the population structure.' He has called for the establishment of a policy system to boost birth rates and has encouraged women to 'actively foster a new type of marriage and childbearing culture.'

In response, the Chinese government has introduced a range of pro-natalist measures:

• Relaxing family planning policies, first allowing two children in 2016 and then three in 2021.
• Offering various incentives such as cash handouts, tax cuts, property concessions, and extended maternity and paternity leave.
• Expanding the national health insurance system to cover birth-related expenses.
• Exempting childcare, marriage-related services, and elder care from Value-Added Tax (VAT).

A notable policy, effective January 1, 2026, is the imposition of a 13% Value-Added Tax (VAT) on condoms and other contraceptives. This marks the first time in three decades that these products are subject to VAT, having been exempt since 1993. The measure, included in a VAT law approved in 2024, is intended to boost birth rates and modernize tax laws. However, experts suggest this tax is largely symbolic and unlikely to significantly impact birth rates, as the high cost of raising children remains the primary deterrent. The policy has also drawn criticism and ridicule on social media, with some raising concerns about potential public health implications.