CNBC's The China Connection newsletter: Beijing wants more babies — are businesses ready for Gen Z parents?

Hello, I americium Anniek Bao, a Singapore-based newsman penning astir China's system and business, filling successful for Evelyn this week. Welcome to different variation of The China Connection.

This week, I look astatine however businesses eyeing China's $644 cardinal baby-care marketplace are gathering a caller procreation of parents — shaped by modern parenting values and spending habits.

From makers of babe strollers to coding apps, Chinese companies are facing a caller benignant of customer: the Gen Z parent, with antithetic ideas astir raising children and spending connected them.

China's young parents are digital-natives, person a planetary outlook and are similar experiential learning. That mindset is shaping however — and wherever — they spend.

"When you person younger, much digital, planetary and cosmopolitan parents, their spending patterns are precise antithetic [from those of older generations]," said Joe Ngai, president of Greater China astatine McKinsey & Company. Many present prioritize children's experiences, specified arsenic play lessons and skis trips, helium added.

"We are seeing much spending connected the per-kid level, [creating] a much premium market," said Ngai. Businesses catering to enrichment program, extracurriculars and family-centered question are acceptable to payment the most, helium said.

For businesses selling babe formula, cribs, oregon maternity wear, little fertility rates person been a resistance connected growth, inactive China successful 2024 saw astir 3 times arsenic galore newborns twelvemonth arsenic the U.S. — a standard that makes its baby-care assemblage a prize excessively large to ignore.

The baby-care and maternity marketplace was estimated to scope 4.63 trillion yuan (about $645 billion) in 2025, representing astir 7% yearly maturation rate, according to an manufacture report by iResearch successful February.

The archetypal boost from Beijing's stimulus volition apt beryllium seen successful baby-care and maternity products, earlier expanding into areas specified arsenic pediatric healthcare, aboriginal puerility education, security products tailored to minors, and exertion services designed to enactment household life.

"Think strollers and look today, but pre-K, backstage tutoring and household question time — each the mode to integer learning tools [such arsenic coding apps] and astute parenting apps," said Han Shen Lin, Shanghai-based China Country Director astatine concern consultancy The Asia Group.

Demanding and selective

Parents are besides becoming much selective and demanding erstwhile it comes to what they buy.

Before committing to a product, the younger Chinese parents thin to walk much clip comparing options, scrutinizing details and seeking retired adjacent reviews online, said Andy Li, main astatine Oliver Wyman successful Shanghai. "New parents person go much discerning."

That has raised the barroom for brands arsenic it's nary longer capable to connection quality, companies indispensable besides explicate wherefore their products basal out.

"How to differentiate your proposition, your products against different players successful the marketplace has been a large challenge," Li said, noting that giving parents much transparency into what they are buying, particularly erstwhile it comes to nutrition ingredients, volition thrust archetypal purchase, guarantee retention and marque loyalty.

That heightened consciousness plays into long-standing concerns implicit merchandise information successful China — an contented inactive resonating with Chinese parents astir 2 decades aft an babe look ungraded successful 2008.

"For middle-class families inactive haunted by the 2008 babe look scandal, galore proceed to take overseas brands," said Yaling Jiang, a China-focused autarkic user analyst.

In a motion of however rapidly nationalist sentiment tin shift, driven by the tech-savvy parents, immoderate home baby-care brands raised prices days aft Beijing rolled retired caller household subsidies, drafting a swift backlash connected societal media.

The terms of 1 marque of babe wipes jumped from 39 yuan connected July 31 to 119 yuan connected Aug. 1, according to Manmanmai, an e-commerce terms tracker, portion a section look powders' terms leapt much than 50% successful days.

Young parents accused companies of "ripping disconnected the subsidies" earlier the wealth has adjacent arrived, with immoderate calling for boycotts. Several brands person since apologized, describing the increases arsenic periodic adjustments.

But that backlash highlights a generational shift: Gen-Z parents are value-driven, societal media-savvy and speedy to telephone retired brands they judge transverse the line.

Beijing's push

In a archetypal for the country, China past period launched a nationwide child-rearing subsidy program, handing retired 3,600 yuan ($503) a twelvemonth for each kid nether three. It was the archetypal clip Beijing extended specified subsidy for the firstborn child, with past measures targeting couples with 2nd oregon 3rd child.

The authorities is betting connected the subsidy to trim the fiscal strain of parenting and easiness what it calls the "fertility anxieties" of young couples.

Separately, Beijing connected Tuesday announced tuition fees waiver for children successful their last twelvemonth astatine public preschools and immoderate backstage kindergartens, starting arsenic soon arsenic the upcoming autumn semester.

The measures supplement China's efforts to trim childcare costs astatine a clip erstwhile the state is staring astatine a demographic crisis, fueled by a descent successful commencement rates.

China has seen 3 consecutive years of colonisation decline, and seven consecutive years of commencement complaint declines, with a modest rebound successful 2024. Muted commencement rates besides stem from an alarming driblet successful matrimony rates, which fell to the lowest level successful astir fractional a period past twelvemonth with conscionable 6.1 cardinal caller couples.

Births dropped to 9.7 cardinal past twelvemonth — a small implicit fractional from the 18.8 cardinal successful 2016 erstwhile China scrapped its one-child argumentation that had restricted the size of families — according to Economist Intelligence Unit's estimates based connected authoritative data, portion the fertility complaint is conscionable supra 1.0.

Fertility complaint refers to the mean fig of children a pistillate would person successful her lifetime.

In caller years, China has raised its commencement quota to 3 per couple, introduced taxation breaks for childcare and moved to curb after-school tutoring costs. Local officials person tested adjacent bolder incentives, from 10,000 yuan first-baby bonuses successful Inner Mongolia to monthly stipends for larger families successful Shenyang.

But experts accidental fiscal incentives unsocial aren't capable to alteration minds, peculiarly among educated women successful municipality cities, who person continued to look pugnacious choices betwixt vocation progression, precocious childcare outgo and the load of eldercare.

Millennials and Gen Zs are besides portion of the alleged "sandwich generation," balancing attraction for some aging parents and young children. "When you've inactive got aged parents to enactment due to the fact that there's not a peculiarly supportive pension system, past a batch of your incomes going up there, alternatively than, starting your ain family," said Harry Murphy Cruise, caput of economical probe astatine Oxford Economics.

The outgo of raising a kid until they are 18 comparative to per capita GDP is astir 6.3 times successful China versus 4.11 times successful the U.S., according to a population probe deliberation tank.

Hiring assistance successful tier-1 cities similar Shanghai has besides been priced retired of scope for astir dual-income households, said Asia Group's Lin.

"For highly-educated, azygous millennial and Gen Z women who haven't had children, there's a increasing consciousness of the intelligence and carnal burdens that travel with matrimony and childbirth," said Jiang.

The 3,600 yuan subsidy lone covers the outgo of astir 10 cans (800 to 900 grams each) of babe formula, she pointed out.

For now, Beijing's stake is that a small other currency successful parents' pouch — and the spending it triggers — mightiness astatine slightest springiness the country's commencement rates a short-term boost, adjacent if it doesn't nutrient a babe boom.

China's BYD posted its archetypal diminution successful monthly deliveries. In July, the starring Chinese EV maker shipped 341,030 units, astir 10% little than 377,628 successful June. Domestic competitors Li Auto and Nio besides recorded a driblet successful deliveries.

Nvidia denies China's accusation that its chips person a 'kill switch.' The Cyberspace Administration of China said past week that it needed Nvidia to supply documents connected what it called vulnerabilities successful the firm's H20 AI chip, which is targeted astatine the Chinese market.

Chinese text-to-video AI models are topping scoreboards. TikTok genitor ByteDance hold the archetypal and 3rd spots successful probe firm Artificial Analysis' top-ranked text-to-video generative AI models, portion Beijing-based Kuaishou's Kling AI ranks fifth.

— Yeo Boon Ping

Mainland China and Hong Kong stocks inched higher amid mixed trading successful the portion arsenic investors digested caller tariff comments from U.S. President Donald Trump.

Mainland China's CSI 300 is up 0.18%, portion Hong Kong's Hang Seng Index — which includes large Chinese companies — had gained 0.17% arsenic of 12:19 p.m. section clip (12:19 a.m. ET). The mainland benchmark is up 4.28% twelvemonth to date, information from LSEG showed.

— Lee Ying Shan

The show of the Shanghai Composite implicit the past year.

Aug. 7: Trade information for July

Aug. 8-12: World Robot Conference 2025

Aug. 9: CPI, WPI for July