In the last few years, one of the big themes among pundits has been predicting the continuing rise of China as a world power. A close look at the current state of China indicates that there is a strong basis to predict that the opposite will occur. Here are the key facts:
1) In 1979, China implemented the notorious one child rule that prohibits Chinese families from having two or more children. While this rule has exceptions, particularly for the rural Chinese population, it has been extremely effective at reducing the fertility rate in China. Prior to the imposition of the rule, 53 percent of all births in China were children who had at least two older siblings. By 2000, according to the Chinese census, fully 68 percent of all births were of a first child, compared to 21% of all births prior to the imposition of the policy. This percentage has continued to climb in the last decade.
2) In the last two decades, medical advances have made it commonplace in China for expectant parents to learn the sex of their child early in the pregnancy. Particularly due to the one-child policy, there has been a strong move in China towards the preference of males and the abortion of female fetuses.
3) These two trends taken together have significantly reduced the growth of the Chinese population and the projection of future growth. Not only are future generations going to be smaller than the generation of their parents due to the limitation to one child, but the lack of females due to sex selection will mean that the decline in the size of future generations will accelerate even more quickly as the years go by. There will simply be fewer women to become mothers.
4) The improvement in Chinese medicine means that life expectancy in China is also making significant advances. From a country with a small elderly population, China will be transformed over the next 40 years into a country with a significant elderly population cohort.
5) The current stimulus for the rapid Chinese economic growth has been the low cost of Chinese labor. Chinese are no better educated than many other societies. China does not have particular natural resources that give it an advantage. Many companies have located their facilities in China simply to take advantage of very inexpensive labor that is available.
So what do these facts portend? Over the next fifty years, unless there is a change in policy and behavior in China, the Chinese population will stop growing and begin shrinking. The population will also rapidly age as both birth and death rates decline leaving fewer new children and more of the elderly. It will not take that long for China to develop enough of a shortage of labor that the cost of Chinese workers will rise to a level that makes other locations more profitable places to put factories. In other words, Chinese economic growth will no longer be fueled by low cost labor.
At this point, China may be able to make the transition to dealing with higher labor costs, but this will not be easy. At the same time, China will also be dealing with an excess of men. By 20 years from now, it is expected that fully 20% of younger Chinese men will not be able to find wives due to the lack of women. This will promote the rise of massive levels of prostitution and may also cause unrest within Chinese society. If the Chinese try to keep wages down to deal with their economic problems, they will face opposition from workers who have no families and identify themselves more with their work than anything else. It is an explosive combination.
By fifty years from now, there simply may not be enough young people in China to support the much enlarged elderly population with the result that there will be further social pressure that may cause uproar in Chinese society.
Will any of this really happen? We will know in fifty years. The point, however, is that there is a reasonably good possibility that this prediction is correct. Before we accept the views of the pundits who tell us that China is the coming superpower in the world, we should all realize that what they predict is from from inevitable. Fifty years from now, the Chinese may look back on 2011 as their glory days.
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