China's population collapse
Posted: Sun May 21, 2023 8:27 am
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Less people means there is more physical space per person. In very crowded countries like China, this is a real relief.Benefits of a shrinking population are overlooked.
1. There is no or a reduced need to build new housing and infrastructure.
Disagree with this thesis. Russia being a case and point why. Russia has been in population decline mode for the last decade almost and it has certainly not toned down it's military aggressiveness. If anything it has probably only increased it. In fact, I would argue that Putin's attempt to expand his population base by force was one of the main drivers of the current war in Ukraine. Why else are the Russian's so determined to steal Ukrainian children?
Well, this may be the weakest part of my response. I still think that the should also part of my response needs to be emphasized. As Xyls points out, the reality of the situation may be quite different. Perhaps I should have been more careful about separating idealistic sentiments from hard-nosed prediction.Xyls wrote: ↑Mon May 22, 2023 4:26 pmDisagree with this thesis. Russia being a case and point why. Russia has been in population decline mode for the last decade almost and it has certainly not toned down it's military aggressiveness. If anything it has probably only increased it. In fact, I would argue that Putin's attempt to expand his population base by force was one of the main drivers of the current war in Ukraine. Why else are the Russian's so determined to steal Ukrainian children?
I would also argue that this may encourage dictatorships to act sooner against enemies if they feel demographics will weaken their position in the future. It might be that population decline makes wars MORE likely, not less.
CLINT LAURENT EXPLAINS CHINA’S DEMOGRAPHICS CHALLENGE
By OpenMarkets Jul 10, 2013
China has again been thrust into the spotlight of global markets as fresh signs of economic weakness send commodity markets into a tailspin. This latest pullback comes amid a growing consensus that after three decades of double-digit growth, the policies that created the world’s second largest economy have run their course.
Another, often overlooked, reason why China will need to steer a new course is its rapidly changing demographics: the workforce that powered the “world’s factory workshop” is rapidly shrinking and aging. At the same time, households are growing wealthier as a growing urban consumer class emerges.
These demographic realties promise to drive a fundamental shift in the makeup of China’s economy. To gain some perspective on what China’s economy might look like in the future, we sat down with Dr. Clint Laurent, founder and Managing Director of consultancy Global Demographics and author of “Tomorrow’s World: A Look at the Demographic and Socio-economic Structure of the World in 2032”
We hear increasingly about China’s aging workforce. But with a population of 1.3 billion plus people is this not a red herring?
China’s population will reach a peak in 2018 before beginning an accelerated decline. But China’s labor force is already shrinking – and this is a fact, not a forecast.
The main reason is the migrating rural population that historically provided new factory labor has hollowed-out in the 15-39 age group. There is basically nobody left to migrate and this is massively under-reported. China also has virtually no spare capacity given 71 percent of woman and 81 percent of men of working age are already employed.
We expect China’s labor force to contract from 761 million in 2012 to 626 million in 2032. After adding six million workers every year to its labor force in the two decades up to 2010, China will soon see a decline at an average rate of 6.7 million workers per year.
Are we talking about a phenomenon that is peculiar to China – how does this compare to elsewhere in the world?
I don’t think any societies in human history have experienced such a rapid decline in the number of workers as China inevitably will.
China’s situation contrasts sharply with other key regions. Young population regions such as developing Asia, India, North Africa, the Middle East and South America will all see double-digit labor force increases. The older regions of the world like Western Europe are expected to be relatively stable with the exception of North America. It will see a 13 percent increase over the next 20 years due to migration and having a relatively younger population.
Will it not be possible to manage this labor force shrinkage by reversing China’s longstanding one-child policy?
There is a big misconception about the extent to which China’s one-child policy is responsible for this situation. The reality of this policy is that it only applies to the minority of the population – ethnic Han Chinese born in an urban area. This works out at about 38 percent of the childbearing population. While this policy has had an impact, it is now diminishing. If it were relaxed we would not expect to see a surge in births.
The bigger constraint is affordability. The government knows it can only gradually relax the one-child policy because it will cost so much. Often where the rural population can have more than one child, if they have moved to urban areas the parents will have to pay for the child’s education and health care. This effectively acts as a birth constrain. And you have to remember it takes 15 years from a policy change to start getting new additions to the labor force.
What does this all mean for China’s growth rate?
China’s growth is going to slow. Expectations that it can continue at 7 or 8 percent are not realistic given that the labor force is now shrinking and will continue to shrink. There is improvement in productivity, but worker numbers have slowed down. Net productivity is less, and GDP slows. Our forecasts are for China to average a growth rate of 5.1 percent for the next ten years. [Note: This was accurate.]
But it is not all bad news. What people forget is that China’s consumption is still only 35 percent of GDP. It is double that in the U.S., and of the 75 countries we cover, the average is 55 percent. We expect rebalancing of China’s economy will happen, driven by demographics. In the next ten years we expect consumption to reach 39 percent of GDP, and household incomes to double. [Note: Consumption is indeed now 39% of China's GDP, and at least in urban areas, household incomes almost doubled from 27,000 to 49,000 Yuan.]
Another kicker to consumption is the fast growth of the group between 40-64 years. These silver haired consumers will have spending power. We expect the number of empty nester households in China to grow from 53 percent to 68 percent by 2032.
What does this rebalancing of growth mean for demand coming out of China?
I expect the demand for commodities will drop. The big difference is you will go to China to sell things rather than to buy.
Given the huge growth in the number of people in the 40-64 age group, this will be an important demand segment. This will be good for self-actualization goods – by this I mean travel, skin care, wellness, clothing and dining out. I also expect greater demand for higher quality goods. This is something domestic Chinese manufacturers will have to adapt to.
If China is set to lose some of its manufacturing capacity – who is best placed to benefit?
India is often touted as a beneficiary as it is a much younger population, where its millions of well- educated young people give it a so-called demographic dividend. But to me this is a bit of a fallacy. The problem with India is only 80 percent of 6-12 year olds go to primary school. This means each year India does not educate five million children. I think this is enough to cause social trouble, and it also puts a limit on the country’s potential. In twenty years’ time robotics will replace most low-end jobs.
I expect to see other countries in the region such as Indonesia and Thailand regaining competiveness in manufacturing. Eastern Europe is also looking competitive as it has proximity to markets, educated labor and price competitiveness.
ALSO CONSIDER THIS: https://www.forbes.com/sites/china/2011 ... f137c975d8
In the Nov/Dec 2010 issue of Foreign Affairs magazine, there is a fantastic article entitled “The Demographic Future” by Nicholas Eberstadt, where he introduces what the world of 2030 will look like from a demographic standpoint. As he explains:
“It is already possible to draw a reasonably reliable profile of the world’s population in 2030. This is, of course, because the overwhelming majority of those who will inhabit the world 20 years from now are already alive. As a result, one can make some fairly confident estimates of important demographic trends, including manpower availability, the growth in the number of senior citizens, and the resulting support burden on workers.”
Mr. Eberstadt spends a portion of his essay on China’s future situation, and he paints an outlook most people familiar with China’s demographic trends have known for some time: a doubling of the number of senior citizens, a shrinking of the younger working class, and rudimentary social welfare and pension systems incapable of coping with the massive imbalance.
This coming reality is shared by the U.S. and all developed nations, except China’s is pushed to the extremes because of its much larger population, much poorer per capita income, much lower education levels and a more ill-equipped pension system.
Yet, for all these colossal national challenges, Eberstadt’s essay adds one more demographic trend unique to China that will have significant social and cultural implications:
“…China will face a growing number of young men who will never marry due to the country’s one-child policy, which has resulted in a reported birth ratio of almost 120 boys for every 100 girls…By 2030, projections suggest that more than 25% of Chinese men in their late 30s will never have married."