Chinese Demographics Starting To Get More Attention

By 2050, it is estimated that there will only be one working person for each one retired in China.

This is the issue confronting the second largest economy in the world. Of course, China is not the only country that is going to have to face this situation. However, it is the largest nation by population, GDP, and contribution to global growth over the last few decades.

In short, the forecasts that it could pass the United States as the largest economy in the world might be premature.

This is something the CCP is well aware of. For this reason, many are talking about the matter. The question on everyone's mind is will the destruction due to demographics happen before a revival can occur?

For many, the former is a foregone conclusion.

Source

Economic Impact

The first sentence tells the entire story. Another noted stat is the fact the retirement fund in the country is expect to reach zero by 2035. Right now, it is over 7 trillion Yuan.

Here is a short video that describes the situation in detail.

Being the fastest aging population in the history of the world is not a distinction you want to have. This causes a hot of issues, most of which there is no clear answer.

According ot the video, more than 18% of the Chinese population is over 65. This number will grow to 25% by 2030. That means many industries, especially those which are labor intensive, are going to find it difficult to fill positions. Since China does not tend to excel at immigration, it stands to reason the country will simply have to learn to deal with worker shortages.

This is not an impossible situation yet it does cause economic contraction. The video also mentioned the fact the country is trying to switch from labor to technology. This could aid output yet does not satisfy the shortfall in consumption. Even though China is going to have a thriving "silver economy", older people simply do not spend as much money as their younger counterparts. Anyone with kids understands how this is the case.

Geo-Politics

The challenge we see is that many political decisions are being made with the idea that China is a serious superpower. This is not likely the case, due to the population. For example, how can one has a powerful military if the average age of a citizen is over 40? That is the situation China will be in not long from now.

We also have to account for the fact that China because the world's manufacturing center. This is an issue since it tends to be labor intensive. While technology might help here, the real problem comes from the fact that technology provides no benefit. A company in the country of destination can simply build a factory and fill it with robots instead of outsourcing to China.

Hence, the entire political situation might simply be to wait a country like China out. Each year, the demographic situation only gets worse. It is a nation that is going to suffer an economic implosion. The only question is to what degree it will be.

We do not have much track record with countries suffering economic catastrophes due to demographic crises. However, we are going to get plenty of opportunity to practice this over the next few decades. Much of the developed world is facing something similar, to varying degrees. So far, the only example we have of it is Japan, a country that was, at best, flat the last couple decades. Sadly, that is looking like it wasn't the case as there are allegations of overstating the numbers.

Elon Musk stated that overpopulation is not going to be the world's problem. Instead, it is likely that underpopulation creates a host of issues for which we do not have much of an answer.

We are embarking upon economic situations that we never really encountered before. These are decades long trends that are in place. There is no easy solution, not in the short term.

The world is starting to wake up to this fact. When we look at countries like China, Russia, Germany, Spain, and South Korea, we see a lot of economic output that is in trouble.

How will we handle this? By the end of the 2020s, we should have an idea of what we are up against.

Unfortunately, that does not mean we will have a solution; just an understanding of how bad things can get.

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