China's population has decreased for the fourth consecutive year, with official data indicating a record-low birth rate. In response to these demographic trends, the Chinese government has introduced a series of policy adjustments, including the implementation of a 13 percent value-added tax (VAT) on contraceptives, alongside various incentives aimed at encouraging fertility and supporting families.
Demographic Trends and Data
By the end of 2025, China's population stood at 1.4 billion, reflecting a decline of 3.39 million from the previous year. The national birth rate reached 5.63 per 1,000 people, the lowest recorded since the establishment of the People's Republic of China in 1949. Concurrently, the death rate increased to 8.04 per 1,000 people, marking its highest level since 1968.
The National Bureau of Statistics reported that the number of births in China fell to 7.92 million in 2025, a 17 percent decrease from 9.54 million in 2024. These figures contribute to a sustained population decline observed since 2022.
Government Policy Responses
To address the persistent decline in birth rates and an aging population, Chinese authorities have implemented a range of measures:
Tax and Economic Adjustments
- Contraceptive Tax: Effective January 1, a 13 percent VAT is being applied to condoms, contraceptive pills, and other contraceptive devices. This adjustment removes previous tax exemptions that had been in place since 1994. The decision has prompted public discussion regarding its potential impacts on rates of unwanted pregnancies and HIV.
- Childcare and Family Incentives:
- Childcare subsidies are now exempt from personal income tax.
- An annual childcare allowance has been established, with a nationwide subsidy offering approximately 3,600 yuan ($500 USD or $745 AUD) annually per child under three years old.
- Waiver of fees for public kindergartens.
- A pledge to fully cover medical costs for pregnant women, including in vitro fertilization (IVF), from 2026.
- Extended parental leave and cash handouts have also been introduced.
- VAT exemptions have been granted for marriage-related services and elderly care.
Family Planning Policy Evolution
The government has progressively eased family planning restrictions:
- The one-child policy, in effect from 1980, was abolished in 2015.
- A two-child limit was introduced in 2016.
- Authorities permitted up to three children per couple starting in 2021.
- Additional measures include encouraging colleges and universities to offer "love education" to promote marriage and family life, and allowing couples to marry anywhere in China, effective May 2025.
Demographic Challenges and Economic Implications
China maintains a fertility rate of approximately one birth per woman, which is below the replacement rate of 2.1 necessary to maintain a stable population. This trend mirrors those observed in other regional economies such as South Korea, Singapore, and Taiwan.
Experts from the United Nations project that China's population will continue to decline, potentially reducing by more than half its current size by 2100 if current trends persist. Projections also indicate that by 2035, the number of individuals aged over 60 could reach 400 million, representing approximately 23 percent of the total population.
The demographic shift presents several economic and social challenges:
- Workforce Reduction: A diminishing workforce is anticipated, impacting productivity and economic growth.
- Pension System Strain: The growing number of seniors is expected to place increased pressure on pension and healthcare systems, with the Chinese Academy of Social Sciences indicating that national pension funds face depletion.
- Economic Factors: High costs associated with childcare and education, job instability, high housing costs, substantial household debt, limited consumption power, and weak income growth are cited as contributing factors to reduced marriage and family formation among young Chinese. A 2024 report by the YuWa Population Research Institute in Beijing identified China as one of the most expensive countries globally for raising a child.
- Consumer Sentiment: Weakened consumer confidence and demand for goods and services, including housing, are also noted.
Experts, including Dr. Feng Chongyi and Dr. Xiujian Peng, suggest that a population rebound is unlikely without fundamental institutional changes that instill confidence in career advancement and improved life prospects for young people. While policies such as remote work options and ensuring job security for women post-childbirth may offer some relief, they are not expected to reverse the long-term decline.