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A spectator takes a picture on an iPad in Calgary in January during celebrations of the Chinese New Year. This year is the Year of the Dragon, and a 5-per-cent increase in births is expected in China.

Chris Bolin for The Globe and Mail/chris bolin The Globe and Mail

In the Year of the Dragon, the lineups at the Beijing Obstetrics and Gynecology Hospital are longer than ever.

Moms-to-be may wait two hours for a blood test, or nearly three for an ultrasound. At other hospitals, women complain of lineups beginning at 3 a.m. for the 7 a.m. scheduling of appointments.

"It's so busy!" sighed Sun Yueting, 28, while trying on maternity clothing in a shop near the hospital, one of some 17 million Chinese women expected to give birth this year, as the ancient Chinese zodiac fuels a statistical blip in the slowing birth rate. "I didn't care, but the older, more traditional generations like the dragon as a birth year. It has a royal connotation."

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Babies born in the Year of the Dragon are thought to bring prosperity and wisdom to their families, spurring what is forecast to be a 5-per-cent increase in the birth rate this year. By a United Nations estimate, 31 babies are born every minute in China.

The result? Hospital lineups, in-demand baby nurses and a spike in sales of all things baby-related.

At a time when China's government is trying to rebalance its economy away from investment-driven growth toward consumer spending, retail sales are the constant bright spot in increasingly dismal economic figures. Retail spending in China grew 17 per cent overall last year; last month, as GDP growth slid to 8.1 per cent and inflation stayed just over 3 per cent, the growth in retail sales remained reasonably strong at 14.1 per cent.

Within that, the baby-care industry was already among the healthiest sectors.

"The growth is really driven by the rise in disposable incomes," said Larry Kung, the Taiwanese-American founder of China's Leyou chain of maternity and baby care shops. "We don't build a business on one year's spike; we've been growing at a compounded rate of over 60 per cent for the past four years. It's not so much any one year, but the rise in consumption."

For foreign firms, the baby-care industry in China presents a golden opportunity, thanks to a rising middle class, the country's one-child policy and new-parent anxiety over safety scares that have touched everything from Chinese-produced infant formula to toys and clothing.

"The single child is a very big thing for the family, so they are really willing to pay for foreign products," said Helena He, China marketing director of baby and child care for Kimberly-Clark, maker of Huggies. Among the growing areas are disposable diapers, as newly urban parents abandon the tradition of kaidangku, the split pants that allow babies and toddlers to relieve themselves freely.

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Kimberly-Clark is building a second plant to manufacture diapers for the mainland but it won't come on line until next year, leaving them running at full capacity this year even during the warm summer months – when sales drop as split pants return to the streets – as well as shipping in diapers from South Korea to keep up with the rising demand. The company is planning for 20- to 30-per-cent annual growth in demand through 2015.

In the big picture, though, this little population spike will do little to address China's wider problem: its aging and shrinking work force. The United Nations Population Division lists China's fertility rate at 1.6, far below the natural replacement rate of 2.1. Economists warn that China now risks being the first developing country that will get old before it gets rich, and these dragon babies may reach adulthood in a society whose real standard of living changed little even as wages increased.

"In China, the labour price is still low but it is rising so quickly now in the last five years, and this will continue," said Zhu Guozhong, an assistant professor in Beijing University's Guanghua School of Management, warning that an increase in labour costs will in turn drive up all other prices including food, goods and services. "In the future, to an average person, their living standard may not increase that much because of these relative increases in price."

Special to The Globe and Mail

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