The Chinese economy will be halted by demography, not by the US
From 2000 to 2016, the fertility rate in China was on average 1.18, among the lowest in the world. The situation is similar to that of Japan in the 1990s, where the crisis has mutated from demographic to economic. With the increase of the elderly and the lack of social welfare a "humanitarian catastrophe" is expected.
Beijing (AsiaNews) - China is preparing for an economic crisis. It will not be produced by US tariffs, but by demographics. And the blow has been self-inflicted thanks to the one-child policy that has dominated the country for over 30 years.
Even though the government has been allowing couples to have up to two children since 2016, the Chinese are now reluctant to have even one child. From 2000 to 2016, the fertility rate in China was on average 1.18, the lowest in the world.
This phenomenon produces two problems: it reduces the population and (therefore) also the work force; at the same time, the percentage of the elderly increases. Last year there were 2.5 million fewer births in the country and the population fell by 1.27 million.
According to Yi Fuxian, a scientist at the University of Wisconsin-Madison, the current situation in China is similar to that of Japan in the 1990s. At that time, the Land of the Rising Sun was hit by a demographic crisis with an average age of 38.5 years and the number of over-65s up by 18%. The decline of young people in the workforce has led to a reduction in manufacturing and industry; their aging has generated a decline in production and innovation. In this way, the demographic crisis has become an economic crisis. The result was that the share of Japanese products in global exports fell from 12.5% in 1993 to 5.2% in 2017.
An increase in the elderly leads to a reduction in savings. From 1991 to 2016, savings in Japan fell from 35.7% (in 1991) to 24.5% (in 2016). It must be said then that the increase in the elderly leads to an increase in medical and pension expenses, increasing the state debt.
As a percentage of GDP (gross domestic product), healthcare expenditure in Japan increased from 4.4% to 8.6% in 2014; pension costs from 4.9 (in 1991) to 10.2 (in 2013); the state debt grew from 63% (in 1991) to 236% in 2016.
For Yi Fuxin, today's China is tracing step by step the path of Japan in the 1990s. And since the fertility rate in Japan at the time was 1.42, while the current Chinese rate is lower, this means that the Beijing crisis will be even harder than Tokyo's.
The prospects are not good. In 2015, China had 6.9 workers between the ages of 20 and 64, supporting a senior aged 65 or over. In 2030 there will be 3.6 workers per senior and in 2050 only 1.7 workers. Since there are no social or family safety nets in the country, the crisis will evolve "into a humanitarian catastrophe" and as women live more than men, the crisis will be suffered especially by women.
The United States has a more positive situation. In 2018, the average age in the US was 38; in 2030 it will be 40; in 2050 it will be 44. Instead in China the data is: 40 in 2018; 46 in 2030; 56 in 2050. As the age of innovation is calculated up to 39 years, it is clear that if China is still able to produce and invent and compete with the US, in the near future its innovation will be stagnant.