Demography
China’s Achilles heel
A comparison with America reveals
a deep flaw in China’s model of growth
Why I picked up the article:
This article got over 880 comments on its website. Articles on China
usually get certain number of comments not only because of its population but
also that aging China is Asia’s next big concern.
Discussion:
What is the difference between China’s demographic concern and Japan’s
one?
Do economies heavily depend on demography? (Will America posses its
position?)
Summary:
China will overtake America as the world’s largest economy (at
purchasing-power parity) in 2017. But China has its deadly point of unseen
weakness: demography.
①.
Total fertility rate:
2.6(1980)=>1.56(2010) *Shanghi 0.6(2010) =>1.51(2020) óAmerica 2.08(2010) and rising
②.
Population:
1.34billion(2010)=>peak(2026)=>under 1.3(2050)=>below 1 billion(2060) óAmerica rise by 30% in the next 40 years
③.
Average ages(median):
22(1980)=>34.5(2010)=>49(2050) ó America
37(2010)=>40(2050)
China will grow old before it gets rich. China will have a bulge of
pensioners before it has developed the means of looking after them
“4-2-1 phenomenon”=each 1 child is responsible for 2 parents and 4
grand parents
A national pension problem =unfunded pension liability
is roughly 150% of GDP
By 2030 China will be importing workers from outside, rather than
exporting them.
①.
China’s workforce:
72%(2010)=>61%(2050) of its population
②.
Old-age dependency ratio: 11(2010)=>42(2050) ó America 20
China needs large-scale immigration but has problems. Unlike America,
China isn’t an open, multi-ethnic society with long history of immigration and
strong legal and political institution (the absence of predictable institution).
Developed countries have same kind of problem and China has certain
advantages, low tax rate and low public expectation of welfare. But still China
is unique in 2 respects: poorer aging country and more rapid demographic transition.
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