Investment Rating - The report assigns a "Buy" rating to Feihe, Yili, and Mengniu, indicating a positive outlook for these companies in light of the new child-raising subsidies [10][26]. Core Insights - The Chinese government is planning to implement nationwide child-raising subsidies of Rmb3,600 per year for each child under three years old, which is expected to significantly impact disposable income and support the fertility rate recovery [1][2][3]. - The total potential government spending on these subsidies is estimated to be around Rmb100 billion in 2025, based on a forecast of 9.3 million new births [1]. - The subsidies are expected to account for approximately 9% of the per capita disposable income, which is projected to be Rmb41,000 in 2024 [1]. Summary by Sections Government Policy - The nationwide child-raising subsidy will be effective from January 1, 2025, and will cover all eligible children, including first-borns [1][2]. - The policy includes supportive measures such as tax exemptions for the subsidies and the establishment of a grant fund to assist regional governments [1]. Demographic Impact - The report suggests that the subsidies could help recover the fertility rate, particularly among mothers aged 20-24 and 30-44, who have seen declines in birth rates compared to pre-COVID levels [3][9]. - The age group of 0-4 is expected to see a sequential narrowing of declines, returning to positive growth by 2033 [13]. Company Implications - Companies like Feihe, Yili, and Mengniu are likely to benefit directly from the subsidies, as they have significant exposure to the milk powder and dairy markets [10][17]. - Yili and Feihe have the highest exposure to milk powder sales, with 24% and 92% of their 2024 sales, respectively, being related to children's consumption [10][17].