The HIV epidemic is concentrated among high risk groups, including men who have sex with men and sex workers, and the main mode of transmission is sex.
Chinese police cracking down on sex workers routinely look for condoms as evidence of illegal activity, hindering efforts to prevent the spread of HIV among sex workers, one of the biggest at-risk groups in the country, experts said.
China, with a population of about 1.4 billion, has a relatively low HIV prevalence rate, with around half a million reported cases of people living with HIV or AIDS by the end of 2014, according to a government report published last year.
However, the HIV epidemic is concentrated among high risk groups, including men who have sex with men and sex workers, and the main mode of transmission is sex.
Up to 92 percent of the 104,000 cases diagnosed in 2014 resulted from sexual contact, according to research commissioned by Asia Catalyst, which promotes the right to health of marginalised groups in the region.
China provides free condoms for people living with HIV and allocates funds each year to buy condoms for distribution among at-risk populations, including sex workers, it said.
At the same time, police are authorised to crack down on sex work, which is illegal in China, and use condom seizure as its main tactic, Catalyst Asia said in a report.
"When police arrest sex workers, they will search for condoms, and that will decrease sex workers' willingness to carry and use condoms," said Tingting Shen, director of advocacy, policy, and research for Asia Catalyst.
"Among those who have been interrogated by police in the past year, condom usage rates are clearly lower," Shen said in a Skype interview from Beijing.
China's public security ministry could not be reached for comment and did not respond to faxed questions about the survey.
The pro bono legal programme of the Thomson Reuters Foundation provided legal research and advice for the study, which was based on interviews with male, female and transgender sex workers, health professionals, police and managers of sex work venues.
Among sex workers who had not been questioned by police in the past year, 68 percent said they always used condoms, while 48 percent who had been interrogated said they consistently used condoms.
The research found that 76 percent of sex workers who had not been interrogated in the past year always carried condoms, compared with 48 percent of those who had been questioned.
The study said police use two methods to handle sex work cases - trying to catch sex workers in the act and inspecting sex work venues, with condoms as the main focus in operations.
Evidence of condoms was the deciding factor in whether police would take the sex worker to the police station for further action, it said, adding that 51 percent of the respondents interrogated suffered police violence.
UNAIDS said the confiscation of condoms and use of condoms as legal evidence in cases against sex workers is a widespread problem.
"Unfortunately it's a common problem in just about every country in the world," said Steve Kraus, UNAIDS director for the Asia Pacific.
"When you confiscate condoms, studies again and again show that condoms are less likely to be used. Commercial sex is going to take place in more risky venues, where the women selling sex are more vulnerable to violence, extortion, robbery, assault, gang rape."
Asia Catalyst urged China's public security ministry to eliminate search and confiscation of condoms, and their use as evidence of prostitution.
It also called for China to move towards decriminalisation of sex work, and for police cooperation with the sex work community to be a central part of HIV prevention.