Why the Asian Century for China, may never arrive

group of persons wearing yellow safety helmet during daytime People power is coming to an end in China Photo by Pixabay on

By Tobias Devene

When China Rules the World, China: The Emerging Superpower, How Economic Reform is creating a New Superpower, and China, the Remaking of the World Order. These are all titles of books about China and how it will rise, inevitably to be the next global superpower. The idea of China’s 21st century dominance has been embraced by so many pundits to such a degree after snowballing predictions, optimistic models and best-selling books, that it has almost become a cliché. So that’s a wrap; China will be the next global superpower.

If the 18th and 19th centuries belonged to Europe, the 20th to the United States, and the 21st century must surely belong to China, right? It’s their Asian century. Hasn’t China, over the last 30 years brought hundreds of millions of its citizens out of grinding poverty. These millions now have a higher standard of living, though the standard isn’t comparable to the those of the majority of people living in advanced capitalist countries.

The sheer scale and speed with which monumental infrastructure projects have been completed successfully, with ruthless efficiency, in China, is something democracies can only marvel at. At breakneck speed, China has built a vast web of roads, huge dams, power plants and high-speed rail networks. It builds whole cities, brand new, to order. They appear like magic out of the land. Hyperbole aside, China has thrust itself into the economic front rank by generating the most rapid economic and technological development ever seen in the history of humankind. They even have their own space station. China seems to be marching forward on all fronts, even the creative industries.


lighted buildings during nighttime near body of water
Photo by Ágoston Fung on Pexels.com

China has invested heavily in digital, artificial intelligence (AI) and in establishing broadband and digital payment infrastructures like broadband and digital payment systems. It has done this to such a level that now it is almost unheard of for people to use cash in many parts of the China. Its citizens have truly embraced the internet age. 

All-in-one apps like WeChat and Alipay, can provide any legal service imaginable to tech savvy citizens, from booking a home pet groomer service for their dog, to ordering a Californian sushi roll for dinner. Added to this, is the fact that China will probably be the very first country to bring out its own Central Bank Digital Currency (CBDC). In this respect, China is ahead.

         


China’s new Silk Road Infrastructure projects,  Banco Asiático de Investimento em Infraestrutura

There is more: since 2013 has been rolling out the Belt and Road Initiative (BLI) or New Silk Road, to help it carve out new, efficient trading and supply routes across the world. This means Chinese  construction projects in foreign countries, and the creation industrial zones, transport links, power plants, ports and infrastructure projects that, right now, are some of the biggest in the world.  The New Silk Road is a huge undertaking with 16 massive projects in the process of being completed, running as across multiple countries in Africa and Asia – even parts of Europe.  China, no doubt hopes that this spiderweb will provide it with the resources and the economic ties it needs to prosper long into the 21st century.

So, is it surprising that the advanced capitalist countries now feel they are playing catch up with China?


Hold on just one moment!

Ironically, people power, the very thing that has helped China become the manufacturing global powerhouse economy is now turning ugly.  On this metric alone, China will probably never live up to its promise. That problem is a monumental issue which may only prove tractable over decades, if at all.  It’s the D word – Demographics. Put simply, China is running out of working aged people to drive its economy and growth, into the future.

The problem has been decades in the making. China, in the 1970’s already had falling fertility rates. The one child policy, originally called The Family Planning Policy was implemented as a way to alleviate the potential social, economic, and environmental  problems caused by perceived over population. The government enforced this policy through tough financial, penalties. The government promoted and arranged for mass sterilisations and free contraception. As a result, between 1980 and 2014, 324 million Chinese women received Intrauterine Contraceptive Devices (IUDs) and 108 million women were sterilised. China’s fertility restrictions prevented around 400 million births between 1980 and 2015.

For any population to sustain itself at least 2.1 children per couple need to be born on average. But, for China, births fell to 1.22 in 1991 and 1.05 in 2015. Fuxian Yi, a senior scientist at the university of Wisconsin Madison, claims that in 2020, the number fell to one child per couple. This is despite, the policy’s change in 2016 to a 2-child policy,

China’s Window window closed 10 years ago.

China had a demographic dividend. Chinese people between the ages of 30 and 64, are all known as the producers. They produce the most of China’s wealth and prosperity. This demographic dividend is a moment in time whereby the country has more producers than it usually does.  If governments can utilise a demographic dividend when they have a predominantly productive bulge in the population then these governments can stimulate much prosperity.

China’s Window window closed 10 years ago. It is estimated that China’s population peaked around 2011. China’s meteoric growth figures have been slowing ever since. So, this time of reckoning is upon China now. Put simply; China’s people are ageing and there is no new age cohort to replace the older people – simply, not enough babies have been born.

This trend is not likely to change either. To exacerbate this issue, the current, large Chinese working population will become retirees. One only has to look to Japan to see what happens in this situation. Japan was the darling economy of the 1980’s and then it ran into a demographic brick wall. It fell into an economic crisis in the 1990’s which it still hasn’t fully recovered from. 

The situation will be worse for China, as Japan has a more sophisticated health care system, a much higher average yearly wage, and pension schemes. China’s health care and pension systems won’t support retirees to nearly the same extent. Moreover, the average wage in China, is still relatively low at $10,231 per year. (Comparable to Mexico and the Maldives) That’s not much to live off in an increasingly expensive country, with minimal financial, or healthcare, support from the Chinese government.

China’s demographic now, is like Japan’s in 1992 just before the Japanese economy nose- dived. This means China is likely to experience Japanese style stagnation. In fact, ageing has already slowed China’s economic growth down from 9.6% in 2011 to 6% in 2019. 

The World Economic Forum points out that in 2020, China had 4.9 workers between 20-64 supporting 1 senior. In 2035 this number will be halved to around 2.4 to 1 senior. Under the current system, there is not the resources or safety nets sufficient to support all Chinese. There are less women because couples prefer to have sons. One researcher said, for all these reasons, China will grow old before it grows rich.


Confucius, The Granger Collection.

So, what can China do? They could do what the West has done and encourage immigration, to make up the shortfall in domestic births. However, Vloggers in China have commented on an increasingly anti-foreigner atmosphere generated by the government. China seems to be openly racist – this is especially true if their adverts are anything to go by. Mass immigration seems to be off the cards.            

                             China will grow old before it grows rich.

Bradford Wilcox and Fuxin Yi suggest that, to help them solve their problem, the Chinese government take a drastic U-turn on the question of religion – in particular, Confucianism. It could revive traditional values and one of those is fertility. Confucianism promotes the idea of family. It welcomes children as gifts, as links in a great chain that unites generations past and future.

Without this major shift of in cultural emphasis, China seems destined to follow the same path as its Asian counterpart. For China the demographic situation may get a lot worse. Even if the Chinese government does mange this demographic time bomb well, there’s another crisis looming on the horizon for China.  This will be the topic of the second article in this series.

It was Dung Xao-Ping who cautioned The Asian century, for China, may never arrive.