Incredibly interesting commentary here, and one that does such a good job of explaining the trajectory of China's economic growth. I guess that is the question, can they alter their demography or are they destined to suffer the ultimate impact of that one Child policy?
It's very unlikely they will be able to raise the birthrate to replacement levels (2.1). It was 1.09 in 2022, partly due to Zero Covid, but also due to to long-term structural trends — higher levels of development, greater urbanisation, and a weak social safety net (raising children in China is very expensive). Anecdotally, many women also either don't want children or only want one child, because they frequently bear most of the burden when it comes to childcare. They should have ended the one child policy about twenty years earlier, but here we are. But all is not lost — if China can raise productivity they can avoid some of the colossal challenges associated with pensions etc. And an ageing population will help them transition to a more consumer-driven economy that may *may* even import more goods from Europe and the United States. One final bright spot is that the human capital of young Chinese is significantly higher than older generations, which — if the government eases its grip on the private sector — will help drive productivity growth. For a good contrarian primer on why China's demographics are not destiny you can read this excellent article from PNAS: https://www.pnas.org/doi/10.1073/pnas.2108900118
Apologies for long reply — enjoy your newsletter and enjoyed this article!
Incredibly interesting commentary here, and one that does such a good job of explaining the trajectory of China's economic growth. I guess that is the question, can they alter their demography or are they destined to suffer the ultimate impact of that one Child policy?
It's very unlikely they will be able to raise the birthrate to replacement levels (2.1). It was 1.09 in 2022, partly due to Zero Covid, but also due to to long-term structural trends — higher levels of development, greater urbanisation, and a weak social safety net (raising children in China is very expensive). Anecdotally, many women also either don't want children or only want one child, because they frequently bear most of the burden when it comes to childcare. They should have ended the one child policy about twenty years earlier, but here we are. But all is not lost — if China can raise productivity they can avoid some of the colossal challenges associated with pensions etc. And an ageing population will help them transition to a more consumer-driven economy that may *may* even import more goods from Europe and the United States. One final bright spot is that the human capital of young Chinese is significantly higher than older generations, which — if the government eases its grip on the private sector — will help drive productivity growth. For a good contrarian primer on why China's demographics are not destiny you can read this excellent article from PNAS: https://www.pnas.org/doi/10.1073/pnas.2108900118
Apologies for long reply — enjoy your newsletter and enjoyed this article!