MW China's new economic drivers: a sad toy elf and a robot police force
By Tanner Brown
Squeezed by stagnant wages, young Chinese are spending billions to buy 'feelings'
Labubu figures at a Pop Mart store in Shanghai. Young Chinese are boosting "emotional consumption."
Labubu, a $4-billion toy, is outshining electric vehicles and semiconductors in China. Says one 24-year-old: "I already know what a new phone feels like."
A small, goggle-eyed creature with pointy ears and a mouthful of jagged teeth has somehow become one of the defining consumer products this decade. Labubu - the "ugly-cute" elf sold by Beijing-based Pop Mart (HK:9992) - generated roughly $4 billion in revenue for the company in 2025, drove its Hong Kong-listed stock up more than 125% in a single year, and turned up on the handbags of Rihanna, Dua Lipa and Naomi Osaka (who named her bejeweled, customized versions "Andre Swagassi" and "Billie Jean Bling").
At the Fortune Global Forum last October, the CEO of Hong Kong Exchanges and Clearing held up not a semiconductor breakthrough, not an EV milestone - but a Labubu as the emblematic product of China's emerging consumer moment.
Meanwhile, in Hangzhou, home to Alibaba Group (HK:9988) (BABA) and a cluster of China's most ambitious AI companies, something else is making headlines. On May 1, authorities deployed 15 humanoid robots to direct traffic around the West Lake scenic area during China's Labor Day holiday rush.
The machines - part of what officials called China's first formally organized "robot police squadron" - spent eight to nine hours a day flagging jaywalkers, giving directions to tourists and issuing verbal warnings to e-scooter riders who blew through stop lines. In three days, they logged 12,000 warnings. Crowds gathered to take photos with them.
These two stories might seem like unrelated novelties - a viral toy and a tech-bro flex from a provincial government. But taken together, they reveal a reality about where China is economically and where it is trying to go.
Emotional value is increasingly shaping purchasing decisions. Robot cops represent the other side of the ledger: China's institutional ambition.
The Labubu phenomenon is not primarily about design or marketing genius, though Pop Mart has plenty of both. It is a product that sells because it meets a highly specific psychological demand. Chinese consumer researchers have been documenting a shift they call "emotional consumption" - the idea that younger buyers, squeezed by stagnant wages, a collapsed property market, and genuine uncertainty about the future, are increasingly spending on things that make them feel something. Not status, not functionality. Feeling.
"I already know what a new phone feels like," said Shanghai resident Lin Yuanwen, 24, who has spent upwards of 2,000 yuan ($295) on Pop Mart blind boxes in the past year. "Opening one of these, I don't know. It's different every time." The surprise, the emotional hit, the sense of belonging to a community of collectors. That's the product, not the toy itself.
"What looks like a consumer craze points to something more fundamental," said Fan Xinyu, assistant professor of economics at the Cheung Kong Graduate School of Business in Beijing. "Emotional value is increasingly shaping purchasing decisions, at times outweighing practical function."
Pop Mart, to its credit, understood this early. The company has expanded beyond Labubu into other IPs - Crybaby, Skullpanda, Hacipupu - each built around an emotional narrative rather than conventional cuteness. China's designer toy market is expected to surpass 110 billion yuan by the end of this year, growing at roughly 20% annually.
A government that needs to demonstrate its technological bets are paying off is deploying humanoid robots where everyone can see them.
People cycle past a humanoid robot police officer in Hangzhou, China.
The robot cops represent the other side of the ledger: China's institutional ambition. Humanoid robot investment in China reached nearly 40 billion yuan in 2025, up 326% year-over-year. Hangzhou's West Lake deployment was not a stunt. It was a demonstration - the city that built Alibaba and hosts DeepSeek was making a point about what Chinese technology looks like in practice, not just in press releases.
Several other cities have followed: Chengdu deployed a mixed squad of quadruped and humanoid robots, Shenzhen is testing humanoids that shake hands with passersby, and a Wenzhou model literally rolls. Officials in Hangzhou said after the holiday that the machines will be integrated into regular duty rotations.
The temptation is to read these two things ironically - sad comfort toy in one hand, authoritarian RoboCop in the other - and leave it at that. But the more useful frame is an economic one.
A generation of Chinese consumers who can't get excited about buying apartments or luxury goods is spending on emotional experiences and comfort objects, fueling a $15-billion collectible-toy industry almost from scratch. And a government that needs to demonstrate its technological bets are paying off is deploying humanoid robots not in factories first, but in public, where everyone can see them.
Neither story is simple. Both are worth watching.
Tanner Brown covers China for MarketWatch and Barron's.
More Tanner Brown dispatches:
China's next export shock walks on two legs - and costs less than a used car
China's middle class is quietly stockpiling cash - 'shadow saving' - and it could short-circuit the global economy
Yes, consumers in China are consuming again. It's just not their No. 1 priority these days.
Penny pinchers are putting the squeeze on the all-powerful Chinese central government
-Tanner Brown
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June 22, 2026 08:09 ET (12:09 GMT)
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