(FORTUNE Magazine) – IT'S BACK-TO-SCHOOL DAY FOR 3-YEAR-OLD FENG QIYI, AND things are off to a bumpy start. The bites inflicted by mosquitoes that feasted on him overnight have begun to itch. The smelly ointment smeared on him by his grandmother isn't helping. And now his grandmother and the family driver have deposited Qiyi at the Beijing Intelligence and Capability Kindergarten, waved goodbye, and left him to fend for himself. "Children," asks the teacher, "does everyone remember the baby-chick dance we learned before vacation?" Qiyi's classmates flap their arms and sing. The best performers are invited to the front of the class and rewarded with candy. Qiyi isn't picked. "I have candies at home!" he blurts. "Many, many candies!"

And so he does. As the only child in a well-to-do Beijing household that includes his father, his mother, and his mother's parents, Qiyi is used to getting plenty of candy, lavish praise from grownups, and pretty much anything else he wants. Indeed, nearly every aspect of Qiyi's short, comfortable existence has reinforced the notion that he is the center of the universe. That may not be the most rational view of the cosmos, but it is one shared by millions of other Chinese youngsters born since 1980, the year China's social planners issued a sweeping edict limiting each family to just one child. Beijing touts the one-child policy for its success in reducing poverty and raising living standards. Government demographers credit it with preventing nearly 300 million births over the past 25 years and lowering the average number of children per woman to two from more than six. But it is widely lamented that the policy has had a nasty side effect: spawning a generation of selfish brats.

The Chinese have a special name for those tots: xiao huangdi, or "little emperors." They are regularly deplored in the state-run press. China's children are growing up "self-centered, narrow-minded, and incapable of accepting criticism," declared Yang Xiaosheng, editor of a prominent literary journal, in a recent interview in the Beijing Star Daily. Wang Ying, the director of Qiyi's kindergarten, concurs: "Kids these days are spoiled rotten. They have no social skills. They expect instant gratification. They're attended to hand and foot by adults so protective that if the child as much as stumbles, the whole family will curse the ground."

The one-child policy has been loosely enforced in the countryside, where more than two-thirds of China's people live. In remote areas it's not uncommon to find farm families with as many as five or six children. But in cities one child per family remains the norm. Demographers estimate that of Chinese under age 25, at least 20%--about 100 million--have been raised in one-child households. That's only a sliver of China's 1.3 billion people. But for foreign companies hoping to capture the hearts and minds of Chinese consumers, little emperors are a crucial market vanguard. They're confident, cosmopolitan, and eager to try new things. And unlike their rural cousins, they have the financial wherewithal to gratify their whims. An April survey by Hill & Knowlton and Seventeen magazine of 1,200 students at 64 universities in Beijing and Shanghai found that six in ten reported spending more than $60 a month on "unessential items"--a staggering sum given that monthly per capita income in those cities averages less than $250. Many analysts predict that as their purchasing power increases, China's little emperors will emerge as a driving force of lifestyle and market trends beyond China--not only in Asia but in the U.S. and Europe as well. Says Conrad Persons, a consumer-trends analyst at Ogilvy & Mather: "Get ready for the biggest Me Generation the world has ever seen."

The key to understanding this generation is to recognize that it is a breed apart. Everything is different for these kids; the sibling dearth is just the start. China's little emperors and empresses have come of age in an era of unprecedented prosperity. Their parents and grandparents endured years of famine under Mao's disastrous communal agriculture policies and the chaos of the Cultural Revolution. They remember the trauma of the crackdown in Tiananmen Square. But for the Chinese born since 1980, that's ancient history. For youngsters in Beijing and Shanghai--and even second-tier cities such as Dalian, Chengdu, or Kunming--each passing week brings a gleaming new shopping complex, restaurant, highway, or residential development.

And it's not just that they're better off. They're better informed. Although the state retains a firm grip on the media and has spent billions on technologies enabling police to snoop on Internet users, Chinese kids today know more about the world beyond the Middle Kingdom than any previous generation. They are avid techies, making ready use of mobile phones, the Internet, and electronic gizmos of every sort. They track the latest fashion fads in Tokyo, swoon over pop stars from Hong Kong and Taiwan, and watch Hollywood blockbusters on knockoff DVDs.

Consider Wang Qi, a 19-year-old hip-hop music producer scouting for a new pair of Air Force 1 sneakers at the Nike shop in Beijing's trendy Xidan district. Wang--who prefers to be addressed by his street name, "Jerzy King"--moved to Beijing three years ago from the coastal province of Shandong. A music school dropout who has never set foot outside China, he totes a mini-disc player loaded with Eminem, Puff Daddy, and Fabolous. On this particular day he's looking phat in a blue-and-white fleece jacket bearing the logo of the Toronto Maple Leafs. Where'd he get the getup? The U.S., of course. He spotted the jacket and matching pants on www.footlocker.com, paid for them using a Western Union credit card, and had them express-mailed to Beijing via the U.S. Postal Service. At last count Wang's wardrobe included more than 100 jackets and jerseys. Using an Intel-powered computer he assembled himself, he spends hours each day tracking the latest hip-hop styles over the Internet and does a brisk business importing and reselling American street wear (most of it originally manufactured in China) to Chinese friends.

China's little emperors are weaned on cheeseburgers from McDonald's, pizza from Pizza Hut, and fried chicken from KFC. Their enthusiasm for fast food is fattening their own bottoms as it fattens multinationals' bottom lines. In big cities one in five children under 18 suffers from obesity. The weight-loss business is booming. At the Aimin Fat Reduction Hospital in Tianjin, a former military institution that launched China's first weight clinic in 1992, doctors treat 200 patients, most of them under 25, with a daily regimen of acupuncture, exercise, and healthy food. Fifteen-year-old Liang Chen reports proudly that he has lost 33 pounds in less than a month at Aimin. But he can't stop reminiscing wistfully about his regular visits to KFC. (Indeed, his favorite T-shirt is a souvenir from China's largest KFC store.) "I used to be able to eat an entire family-size bucket all by myself," he recalls. "Just one?" snorts his roommate, 14-year-old Li Xiang. "That's nothing. I used to be able to eat four buckets--sometimes five, if I didn't eat the corncobs and bread."

TV commercials starring Jay Chou, a pop heartthrob from Taiwan, have helped persuade millions of mainland teens to drink Pepsi. China's urban youngsters are easily dazzled by fast food, flashy clothes, and the glitter of foreign lifestyles, says Yi Wei, author of Unbearable Happiness, a book about Chinese youth. "This is a fragile generation," Yi argues. "They grow up sheltered, without any concept of sacrifice or self-control." Among parents, the nearly universal complaint is that young Chinese haven't learned to "eat bitterness," a common expression for enduring hardship.

That criticism isn't entirely fair. Little emperors bear the weight of an entire family's expectations on their tiny shoulders. In today's China, urban middle-class children come under enormous pressure to excel academically from as early as 5 or 6 years of age. Parents prod their offspring through a gantlet of costly lessons: piano, English conversation, martial arts, even golf.

Beijing insurance saleswoman Leng Yaqun has drawn up a daunting study schedule for her 13-year-old son, Bingyang, during his six-week summer vacation. It begins at 9:30 A.M. with an hour of homework assigned from school. Then comes an hour of extra math drills and an hour memorizing The Analects of Confucius. After lunch there's an hour for penmanship and an hour for reading (among the titles she has assigned: a Chinese translation of Tony Robbins's Awaken the Giant Within). The day wraps up with an hour for listening to recordings of classic texts in English, including Romeo and Juliet, Darwin's The Origin of Species, and the lectures of Herbert Marcuse.

"I tell him, 'You are so lucky,'" says Leng. "When I was his age, we had nothing to study except the basic school texts. But Bingyang can buy all kinds of books. He can take extra courses. He can get a private tutor and learn about anything he wants from the Internet."

Bingyang does his best. But the Bard goes in one ear and out the other; he gave up on Robbins after the first few pages. "Too boring!" He'd just as soon use the computer to play videogames and the break from school to pursue his real passion: assembling model cars. Many parents confess that they are pushing their kids so hard out of a desire to compensate for the opportunities they never had. But it is also true that advancing through China's educational system requires hours of drilling. The nation's university system has places for only about half of those who apply. Chinese families spare no expense to help their children pull high test scores. Some rent air-conditioned hotel rooms so that their little Einsteins can study in comfort before exams. And as they venture into the workplace, new graduates are figuring out that their status as only children, combined with the inadequacy of China's public pension system, means that responsibility for caring for aging grandparents and parents will fall to them. China's little emperors are "born into a kind of fairyland," says Ellen Hou, a planner at the Shanghai office of global advertising giant TBWA. "But from the moment school starts, their lives become a struggle."

At Qiyi's kindergarten, one of Beijing's best, the struggle starts early. Founded in 1996 by a prominent Chinese educator, the school takes up to 400 pupils each year, from 18 months to 6 years. Tuition and other fees run $6,000, about double the income of the average Beijing household. In addition to instruction in math, science, art, Chinese language, and music, the school offers lessons in English, golf, and tennis. The school puts a premium on discipline, competition, and proper manners. To help young students grasp the virtues of self- denial, teachers offer them candy early in the morning with the promise that they'll receive a second piece if they can refrain from eating the first one before lunch. "By age 3, most students have learned to control their desires," says Wang. That is also the age by which they are expected to be able to recite pi out to 100 digits.

Some thrive in this sort of environment. The Intelligence and Capability Kindergarten's star pupil is 5-year-old Ying Rudi, the son of China's most popular television host and sitcom director and the grandson of a famous actor who was once the country's Minister of Culture. Rudi began piano lessons at age 3 and is now a celebrated prodigy. A poster in the school's front hall congratulates him for sweeping piano competitions this year in Beijing, Chicago, and Geneva.

AT 13, XU QIUSHI is a hardened junior achiever. She, too, is an award-winning pianist--and a formidable competitor in Korean kickboxing. On a recent evening she mesmerized guests gathered in the family living room with delicate renditions of Beethoven and Debussy, then--after a few mouthfuls of fried chicken and a quick costume change--launched into a boisterous demonstration of her head kicks. Xu hasn't the slightest doubt that she will be admitted to Beijing's elite Tsinghua University, and she is already contemplating postgraduate study in Paris. Her long-term goal is to become a diplomat--like her idol, piano-playing Bush security advisor Condoleezza Rice.

Twenty-one-year-old Li Cheng, by contrast, just wanted off the academic treadmill. Li hails from a long line of scholars. His mother and father are nuclear scientists, and his parents and grandparents, he says, "have more advanced degrees than you can count." Li has found his calling as a veejay with the Chinese subsidiary of Rupert Murdoch's Channel V. He says his family is appalled. But the pay is good, and there are other benefits. On a breezy evening in August, Li's career choice puts him before a crowd of 10,000 pumped-up fans at the Summer Shake, a raucous Channel V music festival on the outskirts of Shanghai. His appearance onstage, in a sleek tank top and straw fedora, provokes a wave of high-pitched squeals. Offstage he is mobbed by teenage girls begging for his autograph.

Rebellion has also proved a shrewd career move for Chun Shu, a 21-year-old high school dropout who shot to fame two years ago with Beijing Doll, a sexually explicit novel recounting her search for love, truth, and the perfect punk band. Beijing Doll lambastes the education system for draining the passion from China's youth and pours scorn on Chinese who came of age during the Cultural Revolution for their mindless preoccupation with academic achievement. Before being banned, the book sold hundreds of thousands of copies and was embraced by disaffected students throughout China.

"Don't talk to me about how kids my age have more freedom," Chun rages, stubbing out a cigarette in a Beijing café. "The day China abolishes these stupid entrance exams, that's when you can talk to me about freedom." For all her invective against scholarship, Chun herself can be surprisingly cerebral. She has strong views about George Orwell, Henry Miller, and China's own Lu Xun. But she is apt to lurch from a discussion of great books into a rant about the relative merits of Converse vs. Nike, or Courtney vs. Avril. "Does anyone in America believe Avril is a true punk?" she wants to know. "The silky hair, the perfect skin, that little nose--real punks don't look like that."

But Chun also confesses doubts about her own punk credentials. "I used to think of myself as a lover of music, literature, and ideas, who cared nothing for fashion or style," she wrote in a recent posting on Sina.com, a popular Internet portal. But "rereading Beijing Doll today, I realize that, even more than most girls, I have been obsessed with material things. I could spend money like water just to buy a handbag with a fancy brand name. I am easily bewitched by television advertisements and can be as vain as a peacock. Am I less able to debate the ideas of Dostoevsky because I'm wearing beautiful panties?"

China's old guard doesn't begrudge Chun and other young rebels their choice of lingerie, as long as what they debate in it doesn't verge into topics that are really taboo--like whether they ought to have the right to choose their political leaders. Authorities have taken solace in public opinion surveys suggesting that Chinese born in the 1980s, fed a steady diet of patriotic propaganda in public schools, profess more ardent devotion to their country than those born in the 1970s.

And yet the spread of consumer culture is quietly subversive. The fundamental idea of communism, after all, is the subordination of the individual to the collective; consumerism presupposes the reverse. Gilbert Lee of Research International, a Beijing marketing consultancy, advises foreign firms hoping to win over young consumers to play precisely to their yearning for self-expression, crafting messages that stress values of individuality, freedom, and physical attraction. Lee sees a stark divergence in the preferences of Chinese consumers born before 1980, who are likelier to seek out products that help them arrange their lives in a more secure and orderly way, and those born after the one-child policy, who are looking to project themselves, establish their uniqueness, and make a positive impression on others. In a society where children are indulged as infants and grow accustomed as adolescents to asserting their identity through spending decisions every day--what to wear, what to eat, what music to listen to, what to drive--how much longer before some also begin clamoring for a say in other things: property rights, taxes, the quality of public services?

Shen Jie, a sociologist at China's Academy of Social Sciences, says that all the hand-wringing about little emperors is overdone. They haven't gone soft, he argues, and aren't about to foment revolution. Like kids everywhere, he says, they're just trying to find their way: "If you judge Chinese kids today by the standards of yesterday, then sure, they come up short. They don't like to suffer. They aren't used to eating bitterness. But so what? Is that the main thing China needs right now--more people who are good at being miserable? These kids have other skills. They're creative and opinionated, and have the courage to do new things. Shouldn't that be grounds for hope?"