Mark Tanner reports that while fewer babies are being born in China, today’s parents are making more conscious spending decisions - investing in their child’s health, education, and well-being

By Mark Tanner*

China’s birthrate has been on a steady decline since 2016. Despite fewer births, China’s population continued to grow, thanks to the rising life expectancy of its elderly population. When China first opened up in 1978, life expectancy was around 65 years. Today, it is almost 79 years – surpassing that of the United States in 2016.

But even as Chinese people are living longer, the nation reached a turning point in 2022 when, for the first time in generations, more people died than were born. This marked the beginning of a sustained population decline.

The Dragon Year bump – A glimmer of hope?

Dragon Years are considered auspicious, leading to a cultural preference for having children during the zodiac. This superstition contributed to an additional 520,000 births in 2024 compared to 2023. While a 5% increase is significant, it is no cause for celebration among those hoping for a dramatic turnaround. The bump is a comparable percentage growth to the last Dragon Year in 2012, but represents a 50% drop from 2012’s total number, and even falls short of 2022’s birth figures. The closure of more than 14,000 kindergartens across China has been symbolic of declining birthrates in China.

Fewer babies, but more conscious parenting

At first glance, the declining birthrate may seem like bad news for businesses targeting young families and mums. However, the reality is more nuanced. While older generations may still pressure their children, nieces, and nephews to have kids, social expectations among childbearing-age peers have shifted. It is now entirely acceptable for many young couples to replace a baby with a puppy or kitten, or have no dependents at all.

For those who take the leap and have children, it is often a highly considered and conscious decision – perhaps even more so than during the one-child policy era. With such deliberate family planning, parents are prepared to invest heavily in their child’s well-being, ensuring they have the best opportunities for health and success in life. A child born today will also have parents earning significantly more than kids 15 years ago.

A growing market for children’s products and services

This shift in parenting behaviour has had a tangible impact on spending patterns. In the five years leading up to 2023, even before the Dragon Year bump, children’s health products were the second-fastest growing consumer health category, averaging double-digit growth annually. This trend is forecast to continue over the next five years.

Beyond healthcare, parents are also prepared to spend more across the board. As China’s middle class has expanded, so have their aspirations and lifestyles. Increasingly, parents are looking beyond traditional academic achievements and seeking more balanced, well-rounded experiences for their children. This is further reinforced by Beijing’s education policies, which now mandate at least two hours of physical activity per day for primary and middle school students.

This shift will impact various industries, from the products parents buy for their children to the services they seek out. Whether it is higher-quality baby products, learning new skills, or tourism experiences catering to well-rounded children, parents are likely to less frugal with their kids than they are with themselves.

Conclusion: The market remains strong

Yes, China is experiencing a long-term decline in birthrates. However, businesses targeting children’s products and services should not assume that demand will drop proportionally. With more conscious parenting and a growing middle class willing to invest in their children’s futures, the demand for high-quality kids’ products and services are expected to remain strong. For brands and businesses catering to this demographic, the opportunity is far from disappearing, it is simply evolving.

*Mark Tanner is the CEO of China Skinny, a marketing consultancy in Shanghai. This article was first published here, and is re-posted with permission.