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China's Demographic Destiny Disaster (In 2 Simple Charts)
China’s economy is slowing, and the debate is raging over whether the country is headed for an abrupt hard landing or whether the slowdown will stabilize into a soft landing that may already be underway. However it plays out, Schwab's Jeff Kleintop notes, one thing is clear: A return to the double-digit growth rates of years past seems unlikely. Demographics are destiny.. and China faces two unstoppable trajectories.
China’s rise largely stemmed from a surplus of laborers willing to work for lower wages than the competition overseas. This allowed Chinese factories to turn out goods more cheaply than was possible elsewhere.
China isn’t the first country rise using this model. In the 1970s and 1980s, Japan relied on low-cost, export-driven economic growth to elevate itself to the second-largest economy in the world. However, Japan eventually had to change gears as the country’s birthrate declined and the number of workers fell.
China now faces a similar trajectory, as seen in the chart above. Its working-age population—defined as those between ages 15 and 64—is peaking and is set to decline in the years ahead.
China’s demographic problem has been exacerbated by the country’s “one-child” policy—a system introduced in the late 1970s that prohibits many couples from having more than one child. Although the policy has recently been relaxed slightly, according to the Chinese agency charged with population planning, the one-child policy has prevented more than 400 million births since 1979.
To put that number in perspective, the entire U.S. labor force amounts to about 150 million workers. You can see how demographic trends in those two countries might play out in the chart above.
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That's a big demographic hole to fill with QE-lite...
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Dream on!
China’s economy is slowing,
So if 3% growth for US or EU $14T economies is a big deal and a “booming economy” that might be inflationary and all that, then why should the Chinese $14T economy be expected to grow at 7% or more?
14T spread over how many?
US 330 million population
vs.
China 1.3 billion population with increasing expectations for living standards
You expect more growth in China if you are starting with the same #14T
14T base is being driven by 330 million US vs 1.3 billion Chinese.
I'm not sure that expectation per capita is the best criteria.
List of countries by GDP (PPP) per capitahttp://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita
I get it I could be wrong on this because I am not thinking it through with a common denominator to compare with.
It seems to me that if growth is what you are trying to predict, that 330 million with a 14T economy that is all modernized, is, I don't know, shall we say "saturated?" You gotta create bigger expectations (which we do at times with iShit) and I see a cap coming on that (but that is pulled out of my butt a bit).
The 14T with 1.3 Billion that is not all modernized, is not so saturated. More of them to work and make stuff to trade with the world. Their peak it would seem, would be a heck of a lot higher than the 14T (if we could hold the value of that 14T steady).
I wonder how the shortage of Chinese women (resulting from the 1 child policy) is impacting these charts.
In the long run I would expect any modern economy of 1.3B people to be much more than 14T GDP.
USA + EU = 330M + 500M = 830M @ 28T. But India not doing so great.
So China has a long way to go. However, it's the growth rate I am questioning. I think that China at 3% is more realistic and likely sustainable. Maybe that's what all the "hard landing" vs "soft landing" stuff is about.
Will an "unsaturated" China settle down to a nice 3% growth without going negative first?
JMHO
An aging Chinese population is no problem. Pollution and robots will take care of that.
The US had REALLY bad pollution in the 60s, but it was reversed after Nixon's EPA legislation.
The problem with India and China is there is not enough oil supply (transportation fuels and petrochemical feedstock) to bring their populations to a US/Euro living standard. When you look at the population/productivity numbers thrown around up thread, one quickly realizes this is a zero sum game with not very many seats.
Regards,
Cooter
They are here in Thailand banging the hell out of the Thai honeys. And the Chinese women are whoring all over Asia.
thai honeys = XY = either lawyers or no offspring at all.
either way, its a cultural death punch.
Not all Chinese women are short. The new generation is a bunch of long-legged filles.
DW,I look at is as a surplus of men. They usually rape and pillage, forage abroad for a broad. XS males of 20million soon to be coming someone's way.
You know, I saw you use the same misleading set of statistics last week and didn't say anything.
The US economy is larger than 14 T, and the EU economy is larger still.
China's economy is not at 14 T.
No doubt all three suffer from administrative thumbs on the scale when it comes to publishing statistics, but the only way you can put China any where near the other two is by using the ultimate "Thumb on the Scale" of the UN's imaginary PPP calculations.
And China has clearly topped out in its run for the roses. My guess is that the gap, however large or small, is about to widen as the US emerges from Obamunism and capital continues to flee to Uncle Sam's Waffle House.
You know, I saw you use the same misleading set of statistics last week and didn't say anything.
a Trillion here and a Trillion there....
You still don't offer to answer the question of why China is expected to grow at 7% while comparable economies are not.
So here.... pick your poison
List of countries by GDP (nominal)http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29
Economy of the European Unionhttp://en.wikipedia.org/wiki/Economy_of_the_European_Union
Why are they going to grow at 7%? Nominator or denominator?
Everything in economics/finance/investing is so fucking warped these days, that pissing about this target or that metric HAS to be missing the bus.
In an era of grossly mis-reported facts, one has to simply look at long term macro trends, which can't be denied, and position accordingly.
I like the demographics threads, because, as a small fry joe six pack, I can position myself accordingly by living in the right place at the right time to see an appreciation of my wages/skills/etc.
That said, China has an epic credit bubble going on (like Japan, the US, and the Euro don't), so I kind of see all of it rolling over at some point.
Can they send old people to war?
Regards,
Cooter
Japan up 270 points at 15 year highs, and almost 2000 points (as FUCK is to swearing) above the Dow
and just about up to half of where it was twenty-five years ago.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Shit, last week you said it was your sister's mother's cousin who was bangin' it hard. Now you're doing it too? Muthafucka'! And you do it by clicking and going to some scam website with malicious code? Get the fuck outta' here!
No.
Really.
Get the fuck out.
Asshat.
I can make $7k in a slow afternoon slinging rocks, what's your point?
"Dream on!"
At least you, me, and Xi found that funny. ;)
Many us workers have no work ethic from 18-35
They aren't hungry yet.
Regards,
Cooter
Ruskies win?
we can only hope.
Maybe they can come to Amerika and "terk er jerbs" when the time comes...
https://youtu.be/768h3Tz4Qik
They will start adopting American babies.
You would almost think there are natural cycles to these things, like booms and busts or something...
Well, on the upside, as a guy, nature equipped me to appreciate a good bust ... funny how things balance out!
Regards,
Cooter
Some Junior GS wizard must have written this article. The charts and graphs are too large!
How's the Throat Cancer treating you Jamie? Tell Lloyd hello for me.
What part of F/X reserves did the author miss? What part of manufacturing, did the author miss?
So Lloyd has HPV?
Mathmatical syphilis.
Hockey stick growth for the US, though? Nice touch.
Pretty funny. I needed a laugh.
Thanks!
It would be more logical, better for the Chinese economy, to simply take steps to reduce the population equally among all demographic sectors rather than only reducing births.
Seems in line with what was desired by whoever placed the Georgia Guidestones.
https://en.wikipedia.org/wiki/Georgia_Guidestones
China Demographics Animated Gif http://www.bloomberg.com/graphics/2015-china-population
FROM: The Place Where China Began Its One-Child Policy Is Dying http://www.bloomberg.com/news/articles/2015-03-24/no-country-for-kids-th...
This is a slowdown in China, not a collapse. The students here in China are already talking about implementing their government's new policy of consumer spending which will lessen their dependance on exports. Chinese companies are outsourcing labor to Africa and southeast Asia because the folks here want more money for their labor. Construction, inland, away from the coastal cities is still booming. The US had many slowdowns in the economy between 1946 and 1999. It's no big deal unless your levered to the gills.
That's like saying a parachute with a hole in it is functional as long as you're on the ground.
Chinese are outsourcing mining labor elsewhere, not production, and that's merely an artifact of their proximity to the resources being extracted.
China has blown a credit bubble of massive proportions and when you do that, even slowdowns have real consequences.
Emergency measures required:
1) Legalise Pornography,
2) Ban contraception
3) Public service announcements on the virtues of young woman being easy.
I'll buy that for a dollar!
ZH readers still haven't mastered the concept of catch-up. It's a trick you can only pull off once. More people cannot solve the problem of too many people any more than more debt can solve the problem of too much debt. Governments sure love it though, it's like a goose that lays golden eggs, and they can even afford pretend that the serfs are something vaguely human by calling them by the excessively dignifying name of citizens. For a few decades.
Unmentioned is China's other big demographic problem, too many dudes. Selective breeding has resulted in parts of China having gender ratios north of 130. A natural ratio is 106-ish. India has this problem too.
The Real Dolls factory is working 3 shifts to solve this problem.
Declining populations are not necessarily a bad thing. They are bad for the CEO that depends on increasing revenue to support a bloated stock price and for the governing class trying to make all those entitlement programs pencil. But, the very large families and rapid population growth of the early and mid 20th century are a consequence of a big drop in infant mortality and increase in longevity that have no historical president and are unlikely to reoccur, save some especially destitute backwaters of Africa.
I don't believe for a second that Jeffrey Kleintop is capable of predicting China's demographics 5 years from now, much less 45 years.
Who is Jeffrey Kleintop? We are to believe that he has managed to collect ALL the reliable stats and proved some infallible laws regarding China's demographics when the Chinese Central Government itself has openly questioned birth stats from rural areas?? Can he predict government policies in China? NO WAY!
I suggest Mr Kleintop spend some time on Confucius writings about "reproduction" or actually living in China for 10-15 years. He obviously doesn't have a clue about a key aspect of diehard Chinese values and practices.
I dismiss his charts as mindless speculation. It's beyond me why he would even bother to indulge in such a groundless conjecture, unless it serves some propaganda purposes to certain groups.
Some idiots had talked about Russia's demographics many years ago in a similar fashion. You don't hear them bragging about their predictions, do you? Russia now has one of the highest fertility rates in Europe.
Russia is still at a sub replacement figure of 1.53 (UN, 2012), below Ireland (2.00), France (1.98)m, Norway (1.93),Sweden (1.92), United Kingdom (1.88), Denmark (1.88), Finland (1.85), Belgium (1.85), Netherlands (1.77), Luxembourg (1.67), Estonia (1.59), Latvia (1.59), Czech Republic (1.55), Switzerland (1.53); basically all of Europe.
The only thing thats temporarily halted Russias population decline, its been flat lining for the last few years, is migration chasing the mineral wealth. Given Russia is hell bent on isolating itself and destroying its own economy out of a bizarre sense of pride, its population will soon start declining again.
Here's one of the many articles on this subject:
http://russia-insider.com/en/politics_opinion_society/2014/11/06/07-34-5...
the earth is overpopulated, we need 3 planets to sustain today's living standards.
if they will be less without a war, I bless them.
Correction: you need 3 planets for everyone to live in squalor like free-range hippies. Current living standards in perpetuity would require more like 25-30 Earths...just sayin.
The entire premise is false because the scales are different. China's "decline" in population still leaves them with double the USA's. If the US economy is expected to grow with 400million people, then why would China's stagnate with 800million? They will still have twice as much labour than the USA does.
Shortage of labour is not a future problem for China since more and more and labour is replaced by computers and robots. Even waitresses can nowadays be replaced by robots. More labour just means that the tax payers have to support more unemployed people in addition to more senior citizens (another solution is of course to reduce consumption for both senior citizens and the unemployed).
So I reckon that China is actually better off than most other countries in terms of demographics.
What China and other countries need is more capital income for the masses, not more labour competing for a decreasing number of jobs.
US population growth is increasing only due to immigration, not births. Shut the border from interlopers, US population starts to decline. Stupid charts, tell any story you want.
One Child policy soon to be replaced with One Grandparent Policy.
The working age population of China may fall even faster what with shorter lifespans due to copious pollution in their larger cities.
At the current pace of species extinction, the question is will we adopt a zero-child policy or will a zero-child policy adopt us? The former is easier to reform than the latter.
The 30s Depression taught economists the population dampening effects of no jobs. When the phoney wealth and stimulus of Fiat Currencies finally end, we're going to see a massive die off in world populations.
Don't trust UN population forcast figures as they have an agenda to overhype the threat of overpopultion with their NWO allegiance.
When genuine money of gold and silver return, a cleansing sword will sweep over the land smiting the weak and the deceived.
With the open border policy, who knows what will happen..
I predict there will be more Chinese in the USA than in China in 40 years.
russian demographics desparately needs chinese 'horney' infusion. russia has no population, and by 2025 if nothings done to increase it, russia will literally be baren.