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In an effort to reverse China's sagging birth rate, Beijing has removed a three-decade tax exemption on contraceptives starting Jan. 1, when condoms and contraceptive pills will now incur a value-added tax of 13%, the standard rate for most consumer goods. 

The move comes after 2024 data marked the third consecutive year that birth rates have dropped - something experts have warned is likely to continue. Last year, China introduced an annual childcare subsidy, and exempted such subsidies from personal income tax amid a series of "fertility-friendly" measures implemented in 2024 - such as urging colleges and universities to provide "love education" to portray marriage, love, fertility and family in a positive light, Reuters reports.

Meanwhile, CCP leadership pledged in December at the annual Central Economic Work Conference to promote "positive marriage and childbearing attitudes." 

The country's birth rates have been falling for decades as a result of Beijing's one-child policy implemented from 1980 - 2015, along with rapid urbanization. 
 

High childcare and education costs along with job uncertainty and a slowing economy has also dissuaded young Chinese from getting married and starting a family. 

Low birth rates will end civilization https://t.co/KPxBor9lAJ

— Elon Musk (@elonmusk) April 22, 2025

As Thomas Kolbe noted two weeks ago:

China is expected to lose about 20 percent of its population over the next 30 years.

There is no doubt this will have consequences for the global economy. Societies react reflexively to such developments. China responds with aggressive subsidies for its export engine to counter these domestic distortions, which primarily manifest economically as deflationary pressures.

China's attempt to course-correct comes as global fertility rates continue to plummet. Fertility rates (the average number of children born to a woman in her lifetime) are different from birthrates (the number of live births per 1,000 people in a population over a given period), although the terms are related and often used interchangeably.
 

Meanwhile, look at who has the highest fertility rates: Somalia, Chad, Niger, DRC, and other African nations. Only about 4 percent of the world’s population reside in a country with a high fertility rate - more than five children per woman - and all of those nations are in Africa, the Census Bureau noted. Even in those countries, fertility rates are generally lower than they once were.
 

The fertility rate in India, the world’s most populous country, has steadily declined over the past six decades. In June, the UN Population Fund reported that India’s fertility rate stood at 1.9 children per woman, down from five or six children in 1960.

In 1990, China’s fertility rate was 2.51, despite its one child policy. By 2023, it had dropped to less than one birth per woman, according to the United Nation’s population division.

In the United States, fertility has undergone a persistent decline. It fell below the replacement level in 1972 and reached 1.62 in 2023, a historic low.
 

Asian and European countries have the lowest fertility rates in the world, and South Korea (0.72), Singapore (0.97), Ukraine (0.977), and China (0.999) all have rates below one.
 

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