A decade has passed since China dismantled its strict one-child policy, a measure that had shaped the nation for years. Now, in a bid to boost birth rates, Chinese authorities are exploring a variety of strategies. These range from offering financial incentives to taxing contraceptives and removing levies on matchmaking services and childcare facilities.
Despite these initiatives, the results have been less than promising. Recent population statistics, released on Monday, highlight the ongoing challenges facing what is now the world’s second most populous country.
Although China does not frequently disclose its fertility rate, the last official figure from 2020 was 1.3. Experts now estimate it hovers around 1, significantly below the 2.1 threshold needed to sustain the current population size.
For years, China’s policy restricted couples to only one child, with penalties for those who defied the rule, leading to successive generations of single-child families.
In 2015, acknowledging demographic strains, the government increased the permissible number of children per family to two, and in 2021, upped it again to three.
Economics are behind the decision
The drive to increase the birth rate is closely tied to economic concerns. Presently, China has 323 million citizens over the age of 60, accounting for 23 percent of the total population. This segment continues to grow, while the pool of working-age individuals declines, creating a potential imbalance that could strain resources and the economy as fewer workers are available to support the aging populace.
This demographic shift is happening while China is in the process of trying to transition away from labour-intensive industries such as farming and manufacturing into a consumer-driven economy built with high-tech manufacturing.
While China’s rapid development in manufacturing with high-tech and robotics can reduce the impact of a shrinking labour force, “the bigger concern is whether economic growth can stay afloat with a shrinking population,” said Gary Ng, senior economist for Asia Pacific at French investment bank Natixis.
China reported a 5 per cent annual economic growth for 2025 on Monday, based on official data. But some analysts expect growth to slow over the next few years.
To cope with these massive changes, China will eventually need to reform its pension system, Ng said, as well as broaden the tax base to cope with the higher government expenditure.
Officials have had limited success with policy changes to incentivise families to have more children. In July, the government announced cash subsidies of 3600 yuan ($769) per child to families.
Coupling incentives with other attempts to mould behaviour, the government also has started taxing condoms. China removed contraceptives, including condoms, from a value-added tax exemption list in 2025, meaning condoms are now being hit with a 13 per cent tax that kicked into effect on January 1.
To further promote child-rearing, kindergartens and daycares have been added to the tax-exemption list, along with matchmaking services.
