China’s plan to relaunch birth rates through taxes

To reverse this dynamic, the leaders of the Chinese Communist Party They have launched a package of measures that target the pocket. The first of them ends the tax exemption that condoms have had since 1993. Since January 1, condoms have a 13% tax.

This percentage exceeds that imposed Spain (10%), France (5,5%) o Germany (7%), but also those of its closest neighbors such as Japan (10%), South Korea (10%), Thailand (7%).

The measure is part of the review of the Value Added Tax Law with which Beijing seeks to modernize the tax system, although many analysts consider that the real impact will be limited. Obviously, the cost of raising children and general economic concerns is still significantly higher than paying for condoms.

As part of his plan, he has also included indirect tax exemptions for child care services. Among the beneficiaries are daycare services, kindergartens and others linked to family care.

The tactic is to make it cheaper to breed to children to, in this way, attract birth.

It also proposes extensions of permits. Many regions have extended maternity leave to 158, 180 or even more than 200 days, combining legal leave with additional days incentivized by local governments.

A marked decline

Over four decades, China has gone from fearing a population explosion to face a void in the maternity wards of their hospitals.

The numbers are eloquent: in 1980, the country registered 18.21 births per thousand inhabitants. In 2023 it reached its historical minimum (6.39) and in 2024 it rose to 6.77.

The curve does not fall suddenly, but slides year after year, which shows a structural trend. What for decades was a state policy, reducing births, has now become a headache.

The fertility rate tells the same story even more starkly. From 2.74 children per woman in 1980, China has fallen to slightly below 1 since 2023. That figure is far from the 2.1 necessary to guarantee generational replacement.

Neither the end of the one-child policy in 2015 nor the subsequent authorization to have two and even three children have managed to reverse the dynamic. The problem It is no longer legal or normative: it’s economicalcultural and deeply social.

The causes are known and universal, but not easy to correct. He housing costthe job insecurity urban, the difficulty to reconcile, the delay in the age of marriage and a generation of young people educated in only child logic They weigh more than any specific incentive.

Aid for daycare centers or child subsidies collide with a reality in which having children is increasingly perceived as a economic and personal risk.

The result is a China that is aging rapidly while seeing its workforce shrink. Fewer births today mean fewer workers tomorrow and more pressure on the pension and care system.

The country that for decades was synonymous with demographic abundance is now facing its reverse: the shortage of children. And a good part of its economic, social and political future is at stake in that paradox.