Among the history below birth rate and economic pressures from an aging population, China would eliminate a decade-old tax exemption on contraceptives.

China aims to implement a unique strategy to address a declining birth rate that threatens its long-term stability. Starting January 1, 2026, the government will impose a 13 percent value-added tax (VAT) on various contraceptives, including condoms.

The decision amends the Value Added Tax Law, which in 1993 exempted birth control products from taxation. At the time, the move was part of China’s effort to curb its rapid population growth. However, that policy has become a hindrance to the world’s second-largest economy, whose growth and stability are under pressure due to its rapidly aging population and declining birthrate.

The National Bureau of Statistics reported that in 2024 China recorded a slight uptick with the birth of 9.54 million children, around 520,000 more than in 2023. However, the number of births per 1,000 stood at 6.77 last year, which corresponds to the second lowest level observed in the history of the People’s 202. 2023 at 6.39 per 1,000.

The total population of the country has been steadily decreasing for the past three years. In 2024, there will be more than 1.408 billion inhabitants, representing a year-on-year decrease of 1.39 million. In April 2023, India will overtake China as the most populous country in the world.

Specialists warn that this trend will have a significant impact on the economy of America’s main rival. A Oxford Economics report says that the potential growth of output (an indicator that measures the maximum expansion that can be achieved without generating inflationary pressure) may fall below 4 percent in the 2030s due to a reduction in the labor force and a slowdown in productivity.

Since 2021, Chinese authorities have launched various initiatives to reverse population decline. This includes what they call “the new culture of marriage and motherhood,” a policy that supports families with a mother, father and three children by subsidizing each birth. It also expanded childcare services and extended paternity and maternity leave. In addition, the country restricts abortions by classifying the procedure as non-essential treatment.

Despite these efforts, experts believe that China’s chances of reversing its low birth rate are slim, especially since it is one of the most expensive countries in which to raise children. According to a 2024 analysis by the YuWa Population Research Institute, the average cost of raising a child up to the age of 18 is about 538,000 yen (about $76,000).

In this context, the demographer He Yafu explained in the statements quoted by Bloomberg that “the abolition of the VAT exemption is largely a symbolic effort and is unlikely to create a significant impact on a national scale.”

This story originally appeared on WIRED in Spanish and translated from Spanish.