China's population collapse

[wjfox]

[caltrek]

Ok, I am of a completely different school of thought than those that commented in the above video. My argument is that they focus on one aspect of the situation at the exclusion of many other factors that should be looked upon. Sure, care for the elderly is an important consideration. This includes health care and care for those that can no long care for themselves. Yet, many elder persons are perfectly able to take of themselves and are even able to still contribute to the economy. To get a full picture, one should visit an assisted living facility, then visit an active senior organization or clubhouse. The active seniors' organization will show you how seniors can take of themselves, health permitting. This is especially true in a modernized economy where mechanization in agriculture and industry has reduced the need for hard physical labor. In a country where the shift in age is occurring, there may be some pressure to delay the age of retirement. Part time employment by healthy elderly individuals may also become more prevalent.

Benefits of a shrinking population are overlooked.

1. There is no or a reduced need to build new housing and infrastructure.

2. An ability exists to allow the rest of agricultural land, especially that which is least productive.

3. Such a situation allows a shift in manufacturing to the most productive assets. That is complicated by the need for products across the board. More essential products will be in demand, regardless of productivity gains or losses in the fabrication of such products. Here, the market can actually be of some use. There will be a tendency for more productive assets to be kept operating, while less productive assets that (in theory) produce at higher costs can be idled. Of course, the market will only go so far in allowing abandonment of less productive resources. I suppose that might also be true of the utilization of agricultural land as well.

4. As has been frequently pointed out, a shortage of labor can be offset by further mechanization and reliance on robots. Again, a rising cost of labor due to a shortage of workers will make such a shift more desirable.

5. Managing a country that is declining in population should also result in a less aggressive military posture. There would be a pressure to shift from expansion to more defensive efforts. Of course, leaders may be slow to respond to that pressure.

So, a well-managed economy should be able to handle the challenges of an aging population with relative ease. It is only the most ardent of capitalist oriented thinkers who will insist that the economy must either grow or experience disaster. A managed economy can by its nature manage the shifts involved, even as it uses market mechanisms to assist in dealing with those shifts.

[weatheriscool]

I agree with Caltrek. I'd have less children and invest in them with education, more focus on infrastructure, science and tech...I'd also clean up the environment and make the standards of living higher for all. Exactly the opposite of what the loserterians here in America want to do.

[raklian]

Robots and artificial intelligence (or combination of both) will more than make up the decline in population from the peak in terms of productivity. After that point sometime in the future, artificial intelligence will closely approximate that of humans to the extent an observer will not see a meaningful difference. The human population decline will not be as catastrophic as we are fearing.

[funkervogt]

Benefits of a shrinking population are overlooked.

1. There is no or a reduced need to build new housing and infrastructure.

Less people means there is more physical space per person. In very crowded countries like China, this is a real relief.

I have a friend from India, and says that the overcrowding and associated noise is something none of them really get used to. He and other Indians I've spoken with have also universally said that the overcrowding leads to a cheapening of the value of human life amongst everyone.

There's also a sentiment among Indians and Chinese that, no matter how rich and successful you are, your life can only get so good because you have to periodically leave your nice home and endure the overcrowded, polluted, loud outside world in those countries.

In the long run, a smaller population in both countries would leave their human citizens better off.

[Xyls]

5. Managing a country that is declining in population should also result in a less aggressive military posture. There would be a pressure to shift from expansion to more defensive efforts. Of course, leaders may be slow to respond to that pressure.

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?

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.

[caltrek]

5. Managing a country that is declining in population should also result in a less aggressive military posture. There would be a pressure to shift from expansion to more defensive efforts. Of course, leaders may be slow to respond to that pressure.

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?

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.

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.

Another aspect is that expansionist-oriented leaders may be so oriented regardless of internal demographics. That is to say also regardless of whether or not such policies actually make any sense. International cooperation might yield better outcomes as opposed to aggressive expansionist policies. Expansionist policies may come at a cost, especially when they flare up into a wartime situation, as we see in the Ukraine.

Hopefully, China is largely bluffing in its Taiwan policy. Unfortunately, Taiwan and the West cannot count on their rhetoric being mere bluff.

[erowind]

Population decreases are only problems in growth economies. The constant framing of dropping population as "collapse" is categorically wrong. Capitalist economies demand infinite growth, but that doesn't mean that prosperous economies with falling population aren't possible.

One thing I often hear in articles around this topic is an ableist argument that there are too many old people and too few young people to care for them while also keeping up with the labor demands of the economy. Yet, these same articles never draw ire to the countless useless service and administrative jobs people are forced to do due to lack of educational opportunities and or low pay offered to specialized workers in industry. In other words, there is more than enough productivity in the economy to care for everyone and maintain and build infrastructure to improve society this economic system just doesn't value that work. The capitalists would rather elders die in understaffed nursing homes alone while their children are pushing papers or flipping burgers.

David Graeber's Bullshit Jobs posited that between ~40-60% of jobs in the United States are completely useless. This percentage will be lower in more industrial economies like China but it's not zero. There really is no labor shortage, or fertility crises. There is only a crises of moral priorities. We certainly don't need to double the national workforce to care for our elders either. All these people could be building trains, libraries, scientific centers, planting trees, removing invasive species from our ecosystems and so much more yet they're not, it makes my blood boil when I think about it.

[funkervogt]

Here's an article from almost exactly ten years ago about China's impending demographic decline, and the impact on its economy. Back then, the issue was not as well-known, and it was less credible given China's astonishing and ongoing rise across many domains (wealth, technology, military, science). Reading this now, I'm impressed by how accurate Clint Laurent was.

(I've provided the hyperlink to the article, but it no longer works.)

http://openmarkets.cmegroup.com/6310/cl ... -challenge

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."

[funkervogt]

That last article inspired me to read more about Clint Laurent. Here are notes I made from an interview he did in 2021 about demographics and the global economy:



In rich countries, the graying of the population will mean a lower ratio of workers to old people, forcing people to work until later in life. The retirement age will increase.

Eastern Europe and Russia have highly educated but underutilized workforces. If they played their cards right, they could experience sharp economic growth.

In spite of its shrinking overall population, China could continue to effectively increase the output of its working-age population by moving more people from the countryside into the cities, where they can get more productive jobs. The reserve population of rural people won't run out until 2030, so China should have healthy GDP growth until then.

There is no way the Chinese government can reverse the country's population decline.

Poor public education is a major economic handicap in India and most other Third World countries, though it's improving.



Unlike China, India has failed to move most of its population from sustenance farms to higher-productivity city jobs.

As the young population expands, the government must spend more money on schools to keep up. Because India spends so much money increasing the quantity of schools, it lacks the money to sufficiently improve the quality of its schools. A slower population growth rate would be a blessing in this regard.

India won't start getting its act together for at least another ten years.

The population of sub-Saharan Africa will double in less than 25 years. All the problems that India has are also present, but worse.

A crisis will unfold over the next 25 years:
-Thanks to graying populations, rich countries will consume less and GDP growth will drop to ~1%.
-Thanks to improvements in technology, fewer human workers will be needed to make the goods and services to satisfy that consumption level.
-As a result, the huge numbers of uneducated, working-age people that will be produced in poor countries during the period won't be able to find jobs. There could be 400 million jobless people in Africa, the Indian subcontinent, and the poorest South American countries.
-They will illegally immigrate to the U.S. and E.U. The situation could get very bad after 2030.

A side effect of low, stable consumption levels will be stable commodity prices.