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Is China a paper dragon?


Skywalkre

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Or they just started admitting it. According to Yi Fuxian there could be ~130 million fewer people in China than officially reported. If the difference was due to adding several million births a year for the last 3 decades, it would also mean far less people in the most desired age brackets. 130 million less across all age groups wouldn't be a problem for China, 130 million less of people in their 30s and younger would be a disaster.

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Not sure about how many are pensioners but:

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Some 264 million Chinese people were aged 60 and above in 2020, accounting for 18.7 per cent of the total population, according to the seventh national census released this year. Ten years ago, that figure was 178 million, or 13.3 per cent of the population.

https://www.scmp.com/economy/china-economy/article/3159689/china-population-without-adequate-pensions-more-elderly-say

Retirement age is 60 for men, 55 for white-collar women and 50 for blue-collar women. OTOH a lot of people above the retirement age work anyway.

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Zeihan is quite hyperbolic and very (unreasonably) sure of his conclusions. That said the basic problems he outlines in various presentations are real and will be have a huge economic effect on China. The working age population has been declining for years and as of today, even the Chinese government admits the total population has started its decline (several years earlier than expected and likely due to the PRC response to Covid).

https://www.nytimes.com/2023/01/16/business/china-birth-rate.html
 

"The UN forecasts that China’s population will decline from 1.426 billion this year to 1.313 billion by 2050 and below 800 million by 2100"

https://www.pewresearch.org/fact-tank/2022/12/05/key-facts-about-chinas-declining-population/#:~:text=The UN forecasts that China's,of-the-road projection.


A population drop off in and of itself wouldn't necessarily be a huge deal nor a near-mid term economic problem, but in China's case the overall aging/ demographic picture is truly unique. The One Child policy has created a generation of aging Chinese that severely outnumber all subsequent generations, like the US baby boomers on steroids. The process of depopulation is going to be gradual for now, but by 2030 or so the decline will hit tens of millions every single year. That has huge economic repercussions - witness Japan's Lost Decade(s) after its working population stagnated, then reversed. And China's population is both older than other Asian nations that face/faced the problem and its per capita income dramatically smaller than when any of the other Asian countries hit their population peak. Add to that a much less robust healthcare system.

This obviously doesn't mean China ceases to exist as a culture or even a country, or even that the CCP in general or Xi in particular is forced out of power. What it does mean is that any projection of Chinese economic and military power that relies purely on extrapolating the last several decades of economic growth is a completely inaccurate way of predicting future trends in the country.

On top of that inevitable economic decline in the medium-long term, there are a lot of short term economic issues that China has been papering over, most especially in its real estate sector (and the industries that rely on it). That is probably a more surmountable problem, but it is also a more short term one that will need to be navigated even before any population pressure on the economy. I believe Zeihan also mentions Chinese debt at the regional and individual level in his longer talks; I admit to not having watched this one since I've seen several on the same subject and read a couple of his books.

Their other problem in a peer competition with the US is that in terms of imports and exports, there is probably no other regional power as dependent on maritime trade. China is a net food, oil, and gas importer while also depending on trade for something like 20% of its GDP. And a very large proportion of its food exports are seafood that depend on its vast fishing fleets that sail the world as far away as the EEZ of Chile, where they routinely poach. Ie, they are exceedingly dependent on global maritime security that the US effectively underwrites. That situation is not going to change before the extreme population decline, or one of the several large economic headwinds they face before that, limit their ability to expand their navy into a truly global force.

I broadly agree with Zeihan in this case, though disagree with some of his specifics (and style). But it is hard to see how China can become the next global hegemon, as many have assumed they would, given all these factors (most especially the inevitable drastic population decline). That does not mean they won't simply try to force the issue while they think they have an advantage or move militarily during what they perceive is a closing window of opportunity - there are a lot of parallels with WWII Japan I feel.

Edited by Josh
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Old age care is not as big of an issue for China I think. Large scale elderly care does not require a lot of financing and advance technolgy. What would require that is large scale life extension treatments pushing the life expectancy rate beyond 80. As things are now, both the US and China have upper 70s life expectancy anyway. On PPP terms, they aren't poor. Elderly care is primarily local currency/economy. China doesn't have an electorate that wants its full amount of promised retirement social security AFAIK. With the greater controls that the CCP has, it'll be able to more efficiently spread out lesser retirement due amount without it being challenged every 4 year election cycle. And there's probable a sizable number of elderly Chinese that don't feel the need to burden the country economically so that their hut size living space is the equivelant of a 5 star hotel on 20 year stay. I don't think it'll be so hard for the CCP to motivate its people into having more kids either, at a time of their choosing. No need yet, 1.4, 1.3, 1.1 billion is too many people.

Gordan Chiang has been going on about the coming collapse of China since the mid 2000s. Bad air, construction of ghost cities, internal stress by population for more and internal stress from anti-corruption campaigns within the CCP. Well obviously.. China hasn't collapsed, rather it thoroughly beat any predictions surely. 

Why the same mistake with conclusions. My hunge is that if the populations of the first world are spoon-fed "China is in bad shape, might even collapse" then its easier to get them on board large scale business and trade because then people think less about the potential of military threat, regardless of DoD statements. That is the wrong purpose to stand up a Japan to face down a stronger China, make the two face off against each other even, like Iraq and Iran? Once the whole covid affair sentiment settles and the reality blends into normalcy, it'll be easier to recommit business and trade to even higher levels since the money people in the US think only about money. So they get content creators to massage the population sentiment. My hunge. Because the shrinking/aging population is not that big a deal. 

If it does happen and China is clearly entering stagnation or decline, then yeah, these are factors. But the possibility of that result is not that high.

Edited by futon
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41 minutes ago, futon said:

Gordan Chiang has been going on about the coming collapse of China since the mid 2000s. Bad air, construction of ghost cities, internal stress by population for more and internal stress from anti-corruption campaigns within the CCP. Well obviously.. China hasn't collapsed, rather it thoroughly beat any predictions surely. 

Why the same mistake with conclusions. My hunge is that if the populations of the first world are spoon-fed "China is in bad shape, might even collapse" then its easier to get them on board large scale business and trade because then people think less about the potential of military threat, regardless of DoD statements. That is the wrong purpose to stand up a Japan to face down a stronger China, make the two face off against each other even, like Iraq and Iran? Once the whole covid affair sentiment settles and the reality blends into normalcy, it'll be easier to recommit business and trade to even higher levels since the money people in the US think only about money. So they get content creators to massage the population sentiment. My hunge. Because the shrinking/aging population is not that big a deal. 

If it does happen and China is clearly entering stagnation or decline, then yeah, these are factors. But the possibility of that result is not that high.

Everyone has indeed been predicting China's failure for at least a decade or two. And they have always been wrong. But I don't see how the demographic inversion they have created can be prevented or how it could NOT effect their economic growth negatively. No other country in Asia has defied physics that way. Japan's work force peaked circa 1990, and after the financial crisis of 1991 their economic growth also plateaued. As for increasing the population, the numbers have only trended downward with the exception of the repeal of the One Child policy in 2016 - which resulted in an increase for one year as everyone who want a second child had it. Also, increasing fertility now won't reverse the pattern in the medium term - raising an 18 year old, let alone a productive 25 year old, takes...18-25 years. If fertility shot up right now to 2.1, that wouldn't be felt economically (at least in a positive sense) until at a minimum of 2040-2045. And I don't see how a massive loss in productivity doesn't have an pronounced effect. Perhaps worse, it will be a massive loss in consumers when China is attempting to shift to more domestic consumption based model.

People have been predicting China's down fall for so long now that I think there is a "cry wolf" (or "cry wolf warrior" if you prefer) mentality despite these huge numbers staring everyone in the face. But eventually the Chinese aren't going to be able to overcome simple math, even if they are able to successfully navigate their more immediate economic problems. The only physical way their economy could continue to grow ten years from now is with a steady, unprecedented increase in per capita productivity...and barring a complete reversal of fertility rates or a massive amount of immigration, that would need to be sustained indefinitely.

Edited by Josh
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3 hours ago, Josh said:

Everyone has indeed been predicting China's failure for at least a decade or two. And they have always been wrong. But I don't see how the demographic inversion they have created can be prevented or how it could NOT effect their economic growth negatively. No other country in Asia has defied physics that way. Japan's work force peaked circa 1990, and after the financial crisis of 1991 their economic growth also plateaued. As for increasing the population, the numbers have only trended downward with the exception of the repeal of the One Child policy in 2016 - which resulted in an increase for one year as everyone who want a second child had it. Also, increasing fertility now won't reverse the pattern in the medium term - raising an 18 year old, let alone a productive 25 year old, takes...18-25 years. If fertility shot up right now to 2.1, that wouldn't be felt economically (at least in a positive sense) until at a minimum of 2040-2045. And I don't see how a massive loss in productivity doesn't have an pronounced effect. Perhaps worse, it will be a massive loss in consumers when China is attempting to shift to more domestic consumption based model.

People have been predicting China's down fall for so long now that I think there is a "cry wolf" (or "cry wolf warrior" if you prefer) mentality despite these huge numbers staring everyone in the face. But eventually the Chinese aren't going to be able to overcome simple math, even if they are able to successfully navigate their more immediate economic problems. The only physical way their economy could continue to grow ten years from now is with a steady, unprecedented increase in per capita productivity...and barring a complete reversal of fertility rates or a massive amount of immigration, that would need to be sustained indefinitely.

Japan and China are both in Asia, both in East Asia, but the circumstances are still very different. When Japan's economy stagnated, it did so after reaching maturity in various industries. Top in cars, top in appliances, chipsets, electronics, etc. GDP per capita was higher than the US even. The industries that China is working on is still not a maturity level. Middle income level means an ability to under cut the salaries company workers in high end countries. China is working on cars, chipsets, smartphones, etc. There's still plenty of room to grow because they can still offer competitive costs. Japan's industries in the 1990s would later get undercut by rising countries that work at lower wages, such as ROK. South Korean companies took a slice from electronics, ship building, cars, and even entertainment. Had there been no rising country to undercut, Japanese companies and thus the economy probably produce enough profit to not be stuck at stagnation level. Not to say that as a complaint. It's just natural economics. But whose going to under a massive place like China? Only so much of that volume can be picked up by Vietnam, Mexico, Malaysia, Philippines, etc. One other point, kind of minor compared to whole macroeconomics but worthwhile to add, Japan couldn't export military stuff. Small exceptions do exist like bits inside PAC-2 and SM-3. But its incomparable to what China has been able to sell.

Edited by futon
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10 hours ago, Josh said:

Everyone has indeed been predicting China's failure for at least a decade or two. And they have always been wrong. But I don't see how the demographic inversion they have created can be prevented or how it could NOT effect their economic growth negatively. No other country in Asia has defied physics that way. Japan's work force peaked circa 1990, and after the financial crisis of 1991 their economic growth also plateaued. As for increasing the population, the numbers have only trended downward with the exception of the repeal of the One Child policy in 2016 - which resulted in an increase for one year as everyone who want a second child had it. Also, increasing fertility now won't reverse the pattern in the medium term - raising an 18 year old, let alone a productive 25 year old, takes...18-25 years. If fertility shot up right now to 2.1, that wouldn't be felt economically (at least in a positive sense) until at a minimum of 2040-2045. And I don't see how a massive loss in productivity doesn't have an pronounced effect. Perhaps worse, it will be a massive loss in consumers when China is attempting to shift to more domestic consumption based model.

People have been predicting China's down fall for so long now that I think there is a "cry wolf" (or "cry wolf warrior" if you prefer) mentality despite these huge numbers staring everyone in the face. But eventually the Chinese aren't going to be able to overcome simple math, even if they are able to successfully navigate their more immediate economic problems. The only physical way their economy could continue to grow ten years from now is with a steady, unprecedented increase in per capita productivity...and barring a complete reversal of fertility rates or a massive amount of immigration, that would need to be sustained indefinitely.

One thing that I haven't seen discussed (and I frankly don't understand Chinese social culture well enough to be able to game my way through it) is that the Chinese are hyperauthoritarian communists.  The same party who killed off tens of millions of people already.  I would imagine that just shooting a hundred million elderly would be hard even for them but I wonder; a new giant leap forward where the loyal elderly never stop working and contributing and those who don't are obviously selfish anti-party activists who kind of deserve the ice flow treatment doesn't seem completely outside the realm of possibility. NK routinely starves out 10% of their population, what stops China from doing the same?  I struggle to give credit to them for enough humanity to let the party fall before they do whatever else it takes.  They are in a situation where they can solve much if not most of it simply by killing their people, something communists have been both good at and willing to do.

Am I totally off base here?

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11 minutes ago, nitflegal said:

One thing that I haven't seen discussed (and I frankly don't understand Chinese social culture well enough to be able to game my way through it) is that the Chinese are hyperauthoritarian communists.  The same party who killed off tens of millions of people already.  I would imagine that just shooting a hundred million elderly would be hard even for them but I wonder; a new giant leap forward where the loyal elderly never stop working and contributing and those who don't are obviously selfish anti-party activists who kind of deserve the ice flow treatment doesn't seem completely outside the realm of possibility. NK routinely starves out 10% of their population, what stops China from doing the same?  I struggle to give credit to them for enough humanity to let the party fall before they do whatever else it takes.  They are in a situation where they can solve much if not most of it simply by killing their people, something communists have been both good at and willing to do.

Am I totally off base here?

The cynic in me wonders if that is why COVID vaccinations weren't forced on the elderly and why the Covid Zero policy was summarily dropped into no policy at all overnight. The elderly population in China has not been exposed to the disease, has low rate of vaccination compared to the total population (when clearly this could have been mandatory), and only with a vaccine of questionable effectiveness against post Delta strains (because China refuses western vaccines without technology transfers). We may be looking at Xi's mass retirement plan.

That said, caring for the elderly was never the real problem...as futon noted, it is low tech/low skill industry and pure neglect of the problem is always an option without harming economic productivity. It is the lack of productive workers that is the issue, not the glut of non productive population which quite frankly will be their family's problem, not the government's.

Edited by Josh
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1 hour ago, lucklucky said:

Mao can't happen today. But i can see them offering euthanasia like Canada does.

Why can't it?  Serious question; what stops them from doing it?  Fear of condemnation by the West?  Internal pressures?  The PRC government controls information and communication between its citizens in a way that no totalitarian regime has ever had and would have a good shot of keeping their citizens from ever putting the whole picture together.  It would cost them to be sure but the ruling bodies are probably well aware that they and their families will be hanging from cranes and lightposts if the regime falls so they have very little to lose.  NK gets away with it and they have no direct hold over the West as the Chinese do.

I'm not arguing exactly but I'm also not convinced that the PRC has the modern constraints that everyone seems to feel they do.

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6 hours ago, nitflegal said:

One thing that I haven't seen discussed (and I frankly don't understand Chinese social culture well enough to be able to game my way through it) is that the Chinese are hyperauthoritarian communists.  The same party who killed off tens of millions of people already.  I would imagine that just shooting a hundred million elderly would be hard even for them but I wonder; a new giant leap forward where the loyal elderly never stop working and contributing and those who don't are obviously selfish anti-party activists who kind of deserve the ice flow treatment doesn't seem completely outside the realm of possibility. NK routinely starves out 10% of their population, what stops China from doing the same?  I struggle to give credit to them for enough humanity to let the party fall before they do whatever else it takes.  They are in a situation where they can solve much if not most of it simply by killing their people, something communists have been both good at and willing to do.

Am I totally off base here?

Like I said, put an expiry date on the digital passport.

It's the same as a red dot on the palm.

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3 hours ago, DB said:

Like I said, put an expiry date on the digital passport.

It's the same as a red dot on the palm.

I don't think the PRC would have to be that draconian; it could simply neglect it's older population without executing anyone. Quite honestly the US does this as well, relative to Europe. Depends on where your standard of care is. Though I wonder if cutting out some of the unproductive part of the population is part of the silver lining for the CCP ending Zero Covid. You wanted this? You got it! Be sure to visit grandma!

Edited by Josh
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15 hours ago, nitflegal said:

Why can't it?  Serious question; what stops them from doing it?  Fear of condemnation by the West?  Internal pressures?  The PRC government controls information and communication between its citizens in a way that no totalitarian regime has ever had and would have a good shot of keeping their citizens from ever putting the whole picture together.  It would cost them to be sure but the ruling bodies are probably well aware that they and their families will be hanging from cranes and lightposts if the regime falls so they have very little to lose.  NK gets away with it and they have no direct hold over the West as the Chinese do.

I'm not arguing exactly but I'm also not convinced that the PRC has the modern constraints that everyone seems to feel they do.

Internal pressures and lack revolutionary zealots plus societal knowledge. PRC can't control information at a level that resembles how peasants in Mao time were distant from information. For a new tech in information control, technology creates another that goes against it. The Totalitarian can still win from technology evolution, but in the past the there were also much bigger factors of ignorance and physical immobility affecting knowledge. Then there is new prosperity . Also you have millions of people traveling internally in China and from China to outside that did not happened in the past. For genocidal murder you have to close China and hope you can control it while people that got richer, have better lives don't want to go back. 

I think there is an unwritten rule between Chinese people and PCC: We don't defy you, but you don't do anything that prevents us getting better lives.

 

Edited by lucklucky
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10 hours ago, Josh said:

I don't think the PRC would have to be that draconian; it could simply neglect it's older population without executing anyone. Quite honestly the US does this as well, relative to Europe. Depends on where your standard of care is. Though I wonder if cutting out some of the unproductive part of the population is part of the silver lining for the CCP ending Zero Covid. You wanted this? You got it! Be sure to visit grandma!

It would be more subtle. restrictions on access to services. Targeted messages that emphasise the burden placed on younger relatives and so on.

It's already been noted that the elderly haven't been pushed into getting vaccinations, simply ghosting them from public health messages will push more of them over the edge.

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Quote

China’s Global Mega-Projects Are Falling Apart

Many of China’s Belt and Road infrastructure projects are plagued with construction flaws, including a giant hydropower plant in Ecuador, adding more costs to a program criticized for leading countries deeper into debt

https://www.wsj.com/articles/china-global-mega-projects-infrastructure-falling-apart-11674166180

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I've always been a little skeptical of BRI, no so much because of the quality or loan sharking, but because at the end of the day there aren't many products that can be moved more efficiently over land then by sea. There are some niche small, compact product that work fine on trains (mostly tech) and there are other parishables that benefit from the quicker ride (food products mostly), but if the goal was to connect China more cheaply to a larger number countries to solidify a trade empire, it seems like it would increase China's influence in a relatively ephemeral way.

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