China's Population Is Collapsing. So They're Taxing Condoms. This Will Backfire.
Here's why this "solution" will fail like South Korea's $200 billion effort.
Starting January 1, 2026, China will impose a 13% tax on condoms and contraceptives. The stated objective is to boost birth rates as the country faces an unprecedented population decline.
This measure might seem completely absurd, and honestly, it is. But it reveals something far more significant about China’s demographic crisis and why authoritarian governments struggle to solve problems they created.
Let me explain why this is happening, why it’s doomed to fail, and what it tells us about China’s future economic challenges.
The Demographic Collapse Nobody Saw Coming
For several years now, China has been facing a severe demographic crisis. In 2023, the country lost its status as the world’s most populous nation. China was dethroned by India after consecutive years of Chinese population decline.
To give you an idea of scale, China’s population decreased by approximately 2 million people in 2023 alone. That’s roughly equivalent to the entire population of Paris disappearing in a single year.
According to UN projections, we’re on a staggering trajectory. Today, there are nearly 1.4 billion inhabitants in China. By 2100, there could be fewer than 800 million.
That’s not a typo.
China could lose 600 million people, nearly half its current population, within this century.
How the One-Child Policy Created This Crisis
This crisis originated from the one-child policy implemented between 1980 and 2015. During that period, families were limited to one child per couple, with some exceptions. The problem was the opposite. The policy tried to slow population growth.
To understand why, in the 1960s, the average number of children per woman stood at six. The government believed this growth was unsustainable and would strain resources.
The one-child policy had immense consequences, sometimes tragic ones. It altered Chinese society in ways the government didn’t fully anticipate. The policy successfully reduced births, but it created a demographic time bomb that’s now exploding.
In 2015, the rules changed to allow two children per couple, then three children per couple in 2021. But despite these relaxations, only 9.5 million babies were born in the country in 2024, compared to nearly 15 million in 2019.
The fertility rate has fallen to approximately one child per woman. One child per woman is one of the lowest rates in the world. For context, for a population to replace itself and maintain its numbers, the fertility rate theoretically needs to be around 2.1 children per woman.
China is nowhere close.
Why do births continue to fall, and what consequences can this have for the country? There are many reasons, and they vary depending on individual situations.
Among the most frequently cited reasons is the very high cost of living, especially in major cities. Education costs for children are staggering. There’s enormous pressure in the job market with work rhythms that are sometimes crushing. On the other side, there’s record youth unemployment, which has economic effects and makes it impossible for young people to project into the future.
We can also discuss the extension of education periods, which obviously is a positive development, but can delay the age of first pregnancies. Couples face difficulties not only because of money issues but also due to the high cost of living, challenging environments, and the delicate balance of personal and work life.
There are also questions of conviction, the desire to strengthen differently, to escape this life path, and to reject the injunctions made to women that they must have children at all costs. This advancement in mentality among many couples or many women is common in many countries.
We can observe in Europe, where there’s been an entire debate on this subject in recent months. We can also observe it in South Korea, which has the world’s lowest fertility rate.
The Consequences Nobody Wants to Face
Whatever the reason, the consequences are real. By 2035, nearly one-third of Chinese citizens will be over 60 years old, compared to almost one-quarter today. This evolution concerns authorities because it reduces the working-age population.
The government has already progressively raised the retirement age in 2025, and now we arrive at the rather astonishing measure that was announced and is generating intense debate.
Starting January 1, 2026, condoms and contraceptives will be subject to a 13% VAT rate. This is a tax these products were exempt from since VAT was introduced in China in 1993. VAT is a tax directly added to the price, so it will necessarily directly increase the price for consumers unless distributors and producers decide to reduce their margins.
Here, it’s a necessarily significant increase. The objective is plainly to make contraception more expensive and therefore less accessible to encourage couples to have more children.
Why This Tax Is Doomed to Fail
Experts remain skeptical about this tax’s effectiveness. Many believe it will actually have little impact on couples’ behavior because the decision to have a child isn’t solely about finding yourself at the supermarket facing the cost of a condom.
As we’ve said, it’s a much broader question. It’s about the cost of living, housing, education, and work conditions that can affect available personal time. Beyond that, some also highlight the risk of unwanted pregnancies or increases in sexually transmitted diseases if access to contraception becomes more difficult in the future.
This measure isn’t the only one implemented by the Chinese government. There’s actually a range of demographic and fiscal reforms. There are additional subsidies if you have children, improved access to maternity insurance, and reinforced medical resources.
I won’t go into all the details, but this is obviously one element among others. It’s also worth noting that the government uses communication extensively to encourage births. Last year, there were phone call campaigns organized by authorities with calls encouraging women to have children. These calls were judged at the time to be very intrusive.
Here’s what’s fascinating and disturbing about this approach: the Chinese government wants to solve a crisis it created by implementing the same authoritarian logic that caused the crisis.
The one-child policy was implemented with the belief that the government could engineer optimal population levels through force. Now, facing the consequences of that policy, the government is again trying to engineer population levels through economic coercion.
But people don’t have children because condoms are expensive. People have children when they believe they can provide a good life for those children, when they have economic security, when they have work-life balance, when they don’t face crushing housing costs, when education is affordable, and when careers don’t demand 996 work schedules.
Taxing contraception doesn’t address any of these fundamental issues. It just makes life marginally more difficult for people who are already struggling under impossible economic pressures.
The Broader Pattern: Europe, South Korea, and Beyond.
That isn’t just a Chinese problem. It’s a problem affecting developed and developing economies worldwide. In France, President Emmanuel Macron used the term “demographic rearming,” language that generated intense debate about whether governments should be encouraging births and what role the state should play in family planning decisions.
South Korea has the world’s lowest fertility rate, only 0.7 children per woman. The government has spent over $200 billion on pro-fatalist policies over two decades with essentially zero impact.
Young Koreans cite the same reasons: crushing work culture, impossible housing costs, lack of childcare support, and societal pressure that makes having children feel like an obstacle to career success.
Japan faces similar challenges. Despite decades of government programs encouraging births, fertility rates continue declining. The pattern is clear: once societies reach a certain level of development and once women have educational and career opportunities, fertility rates fall. No amount of government intervention has successfully reversed this trend anywhere in the world.
Why This Matters Beyond Demographics?
China’s demographic crisis has massive economic implications. The working-age population is shrinking, while the older adult population is exploding. That means fewer workers supporting more retirees, which strains pension systems, healthcare systems, and economic growth potential.
China’s economic rise over the past 40 years was partially driven by favorable demographics: a massive working-age population with relatively few dependents. That demographic dividend is now reversing into a demographic burden.
It has implications for China’s geopolitical ambitions, its economic competitiveness, and its ability to sustain social programs. A shrinking, aging population is at odds with the government’s goals of becoming the world’s dominant superpower.
Final Thoughts
The misunderstanding here is profound. The Chinese government wants more births but refuses to address the structural issues making parenthood untenable for young people. Instead, it implements a tax on contraception that will probably increase unwanted pregnancies, sexually transmitted diseases, and resentment toward government overreach, while doing nothing to encourage people who want children to actually have them.
China would need to encourage births by addressing housing affordability, education costs, work culture, childcare availability, and economic security for young families. These are expensive, complex problems that require systemic reforms. Taxing condoms is cheap, simple, and completely ineffective. But it allows the government to claim it’s doing something.
This is a perfect example of governance: the appearance of action without the substance of a solution. Its policy theater is designed to show the government is responding to a crisis while avoiding the difficult reforms that might actually help.
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