China has introduced a 13% tax on condoms for the first time in 30 years, hoping to reverse a rapidly falling fertility rate and an ageing population.

After years of failed “carrot” policies — including cash incentives, IVF subsidies and marriage perks — the government has turned to a “stick” approach.

However, the economics is questionable. For the policy to raise birth rates, demand for condoms would need to be highly price elastic, which evidence suggests is unlikely. The price signal is too weak to offset the huge opportunity cost of parenting, including long-term financial and career sacrifices.

The tax is also regressive, hitting low-income consumers hardest and raising concerns about unintended consequences such as higher rates of unplanned pregnancies and sexually transmitted infections. A striking real-world case study of government intervention, elasticity and policy failure.