We don’t know how China is going to get itself out of this one.
China is fooked.
Ok. Big call, but hear me out.
China is in serious trouble.
Now I know it’s kind of silly to throw stones at a hornet’s nest with an army the size of China’s, but some d!ckehad with a blog in Australia is the least of China’s problems.
Because China has some big BIG problems.
And what’s China’s BIG problem?
People.
It just doesn’t have enough of ‘em.
Well. It’s got lots of them now.
But the real problem has is that China’s population is falling.
Fast.
That’s what we learnt a few weeks ago.
China updated their population data for 2022. And what it showed is that for the first time in 61 years, the Chinese population went backwards.
And the last time the population fell was in the middle of a massive famine!
In fact, just in raw numbers, China added only 10m births in 2022.
That’s less than they added in 1960. That was 63 years ago! In the middle of a famine!
So this is big.
And not only is China’s population falling, it’s set to start falling rapidly. The birth rate is down to just 0.7 birth per person.
When we remember that a stable population requires a birth rate of 2.1 births per person, that massive gap shows us just how quickly the population is going to start falling going forward.
Because the population numbers have been held up by increasing life-expectancy. For many years, that’s made the population data look better than it is.
But that luck is running out, and for the first time in China’s history, there were more death’s than birth in 2022.
But increasing life-expectancy is a double-edge sword. Because what we’re talking about here is a rapidly ageing population. China is ageing quicker than any nation on earth.
That has big consequences. A big population is great if they’re all working and contributing to the economy.
But if they’re all getting old and relying on younger people to help them out, that’s a problem.
The other interesting thing here is that urbanisation seems to have topped out too.
China’s urban population actually fell in 2022, while the rural population increased.
That’s has mixed implications, but one of the big ones is the drag this places on the economy.
Urbanisation, and particularly the need to house recently urbanised populations has been a huge driver of construction and the Chinese economy for the past twenty years.
But if the urban population has peaked, then there’s just no need to build any more high-rises.
And there was a glut already. (Remember the ‘Ghost City’ phenomenon?)
So China has some big problems.
And we just don’t have a model for getting out of a jam like this.
No nation has ever faced this kind of demographic pressure.
No economic model works with a population that is rapidly ageing and rapidly falling.
China is going to have to improvise.
But if this isn’t the Chinese century, then what is it?
The Indian century?
Maybe.
India’s demographics are a hell of a lot better than China’s.
JG.