Thursday, September 9, 2010

Demographic factors of China's economic growth

Joel Kotkin published an article suggesting 5 key reasons why China is not likely to become the world's largest economy. It caught my attention the fact that 4 of them are demographic-related in some way.
According to J. Kotkin, China is more likely to face problems such as (1) Scarce water, (2) lack of adequate energy resources and (3) limited food production over the next decades. As I was reading the article, I couldn't help remembering Malthus. In order to sustain economic growth, China will need to face a 4th obstacle: rapidly aging population and shrinking workforce (a clearly demographic problem).
By 2050 31% of China's population will be older than 60. “There will be over 400 million elderly, with virtually no social security and few children to support them”. And Kotkin also calls the attention to:
  1. The preference for male children has skewed sex demographics dramatically, with roughly 30 million more marriageable boys than girls.
  2. The logical solution to this dilemma would be immigration, but China's culture appears far too insular for such an event. Rather than a benevolent "socialist" super power China, whose population is made up over 90% Han Chinese, will bestride the world as a racially homogeneous, and communalistic "Middle Kingdom."

It's funny because usually China demographics are considered an important factor to China's economic growth. Hey! Not that I agree with Joel Kotkin all the time, but it's an interesting article. You can read it here.

ps. The 5th key reason: Chinese political instability on the long run as a result of a combination of authoritarian regime and growing inequality

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