The reason China is declining is not as simple as any one factor, including demographics. The country’s economic growth has stagnated and its population is aging. Moreover, the Communist Party has weakened, and its elites are increasingly afraid of political opposition. This is a perfect storm for instability and repression.
The population of China is rapidly aging, as a result of low fertility rates. As a result, the number of working-age adults in China will shrink by over two hundred million by the year 2050. That is about one-fifth of the current population. According to experts, this rapid ageing will result in China’s demographic profile becoming more similar to that of Europe by 2050.
China’s demographic decline is a significant problem for the United States and for regional security. The country’s population is expected to shrink from 1.4 billion to 1.32 billion by mid-century. This means that China will likely lose its status as the world’s most populous nation by 2027. China’s demographic decline is both inevitable and high-impact, but it isn’t clear what to do about it.
In the past, China has relied on the demographic dividend to drive its economic development. However, it is now at risk of declining or even going into debt as the demographic dividend is eroded. Therefore, China should find other means of stimulating economic growth. One way is to improve the quality of life of the population. This can be done by addressing the concerns of the young generation, stabilizing housing prices, and optimizing favorable policies for the Chinese population.
While China isn’t the only country in the world facing demographic challenges, the transition in China is the most extreme. Its working-age population (defined as those aged 15 to 64) will decline dramatically from 2020 to 2050. In 2020, China had the third highest working-age population; by 2050, it will be the seventh-lowest. Italy and Korea will also face the biggest dependency increases, but this trend is hardly unique to China.
Increasing total factor productivity, or the output produced with certain inputs, can help offset the declining population in countries like Japan and South Korea. These countries were able to achieve high-income status before their fertility began to decline, but they did it by addressing demographic challenges. However, China has yet to adopt a successful solution. As a result, growth rates will likely slow.
The population growth rate in China has dropped 0.04 percentage points between 2001 and 2010, and the number of births has continued to decline. Earlier estimates suggested that the country’s population would reach 1.2 billion people in 2065, but the latest statistics show that it will be even lower than that. This means that China’s demographic future is more likely to be a crisis than it is a success story.
The Chinese economy is stagnating, which is good and bad for Beijing. Economic stagnation is a condition in which employment is not keeping pace with the new entrants in the labor market. This slowdown has weakened China’s image abroad and undermined its Belt and Road initiative, a strategic plan for growth that will focus on Africa and Europe.
Economic stagnation in China is the result of many factors. The country’s family orientation and the intensifying forces of globalisation are two of the most likely culprits. However, economic stagnation in China may also be a result of ineffective government policy. The Chinese government can be blamed for lack of initiative and poor management of the state.
Another factor contributing to China’s economic stagnation is high levels of corruption. Corruption has been found to have negative effects on decision-making. Corruption in China is especially bad for investment, which is an important determinant of economic growth. The high levels of corruption are a result of Chinese culture, which is characterized by high levels of obedience to superiors and a strong bond between family members.
Nevertheless, Chinese capitalists are looking at the prize that is bigger than the economic stagnation. These people want to become the provider of choice for newly comfortable people in Asia, Latin America, and Africa. Unlike Henry Ford, they are betting that raising living standards will ultimately pay off. This is a gamble that could not only benefit them but also the country itself.
The recent economic stagnation in China may be attributed to Xi Jinping’s anti-market policies targeting private businesses. In addition, the country has drifted away from the era of reform and opening that was typified by Deng Xiaoping. However, Xi has been increasingly active in cracking down on corruption.
While many people have a strong belief that China will eventually recover, the situation is far from certain. This is partly due to distorted prices of key inputs. In addition, there have been widespread land seizures by local authorities and the diversion of subsidized lending to state firms. The government has also begun to reform labor residency policies.
The latest wave of Covid infection in mainland China has hit manufacturing centers across the country. The outbreak has caused travel restrictions and the halting of business operations. Several cities have been placed under lockdowns ranging in severity from the northern province of Jilin to the southern city of Shenzhen. The restrictions vary widely by region and have lasted for weeks to months. In March, Shanghai remained under lockdown, and at the end of the month, Beijing tightened travel and business restrictions.
In recent weeks, China has reported better than expected first quarter GDP growth, but retail sales fell last month. Meanwhile, unemployment in China’s largest cities hit new records. P&G did not provide a corresponding update on the pandemic, but noted that the extended lockdown in Shanghai will help other cities organize medical and food services. However, local governments are already experiencing financial problems and may struggle to sustain a zero-Covid policy.
However, the latest lockdown in Shanghai has killed at least one cleaning worker. Images on social media showed people sleeping in a garage. This brought attention to the workers’ plight and sparked a petition. The workers have since been moved to quarantine hotels.
While the CCP has not yet revised its strategic goals in light of the covid pandemic, the CCP’s leadership appears to have a common goal: to position China as a responsible actor and bolster its international stature. In doing so, it is continuing to use its standard playbook of propaganda. Through “community of shared future”, the Belt and Road Initiative, and maneuvering within international institutions, Beijing hopes to portray itself as a constructive force in the world.
China’s economic growth and energy consumption will be directly affected by the COVID-19 outbreak. This disease has the potential to exacerbate global trade protectionism, and the current domestic outbreak could trigger more trade restrictions in China. Consequently, the effects of COVID on China will likely be felt for years to come.
The first wave of COVID-19 impacted China’s industries differently. In the first wave, the pandemic affected China’s industries from the supply and demand sides. Industries that are vulnerable to lockdowns suffer more output losses than those industries that are more resilient. Furthermore, the global outbreak would likely have a more negative impact on China’s exports.
Communist Party paralysis
China’s Communist Party seems paralyzed. In its quest to legitimize itself by meeting economic targets, it has remained stuck in outdated thinking and a rigid focus on control. This could lead China down a dangerous path, one littered with abuses and individual tragedies.
To combat the problems, the top leadership has mandated the party apparatus to select 1,000 potential leaders to lead it in the years to come. These candidates have been selected at the central, provincial, prefectural, and county levels. As a result, the average age of central ministers and provincial officials has dropped from mid-sixties to mid-fifties. Personnel changes have also reduced the number of bureaucratic deadwood, creating a new technocratic elite.
Ultimately, the CCP retains its monopoly on power and is responsible for setting the major policies. It has 42 million members and nine million cadres. In recent decades, the role of the party generalist has been diminishing and that of the professional manager has increased. Today, most key positions are held by party members. As a result, a career as a party functionary has become less attractive for material success.
Despite this waning influence, few Chinese question the fundamental fact of the party’s rule. This influence has shrunk substantially since the late 1980s, when Deng and his supporters embarked on a major reform program. These reforms include restructuring bureaucracies and restructuring their leadership positions. In addition, they announced a plan to reduce the number of ministries to 52 from 132.