HONG KONG: China has begun taxing contraceptive drugs and devices from the start of 2026, ending a tax exemption that had been in place for more than three decades as authorities intensify efforts to reverse the country's long-running decline in births.

From January 1, condoms and contraceptive pills are subject to a 13 percent value-added tax, the standard rate applied to most consumer goods, according to the new policy.

The change comes as China grapples with a deepening demographic challenge. The country's population fell for a third consecutive year in 2024, and experts have warned that the downward trend is likely to persist.

The removal of the tax exemption is the latest in a series of measures aimed at encouraging families to have more children. Last year, China exempted childcare subsidies from personal income tax and introduced an annual childcare subsidy. Authorities have also rolled out a range of so-called "fertility-friendly" initiatives, including urging colleges and universities to provide "love education" that portrays marriage, relationships, childbearing, and family life in a positive light.

At the annual Central Economic Work Conference last month, China's top leaders again pledged to promote "positive marriage and childbearing attitudes" as part of broader efforts to stabilise birth rates.

China's fertility decline has been decades in the making. Birth rates began falling sharply during the years of the one-child policy, which was in force from 1980 until 2015, and the trend has been reinforced by rapid urbanisation and social change.

More recently, economic pressures have compounded the problem. High childcare and education costs, job uncertainty, and a slowing economy have deterred many young people from marrying and starting families, policymakers and analysts say.