The main threat to China’s rise comes from within
As much as China worries that the United States is trying to hinder its rise as an economic power, there is a potentially greater threat within its own borders: a falling birth rate.
A census released this month showed that the number of births in China fell to its lowest in six decades last year, even after President Xi Jinping ended the one-child policy in 2015 and allowed each couple to have two. Based on these figures, Bloomberg Economics predicted that China’s population would peak in 2025 – much sooner than expected.
Today, the Politburo eased restrictions again, allowing three children per household and raising the retirement age in the world’s most populous country, where about a quarter of people will be 60 or older by 2030.
While this decision alone fails to stop the slide, given the rising costs of having a child, the question now is whether Xi’s government can offset the decline with investments in productivity gains and increased migration from rural to urban areas.
Countries facing similar problems have not behaved well. Japan, which was on the verge of overtaking the US economy in the 1980s, has seen those aspirations evaporate as the working-age population shrinks and debt levels rise.
Chinese economists have proposed spending more on pensions, health care and education to counter disinflationary tendencies, as older people earn and spend less. Yet it will also put pressure on China’s budget, potentially increasing debt levels even further.
While the United States and Europe have made up for slowing birth rates with immigrants, China is attracting far fewer foreigners – not least because of its authoritarian political system.
If China is to take the next step as a world power, it will need the help of each of its 1.4 billion people. – Dan Ten Kate
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What to watch this week
- President Joe Biden has said the United States will stand up for human rights and pledged to raise the issue with Russian President Vladimir Putin at their June 16 summit.
- West African leaders suspended Mali from the regional bloc after military officers staged the country’s second coup in nine months.
- The Peruvian presidential race is tightening a week before the second round between left-wing favorite Pedro Castillo and Keiko Fujimori, according to two opinion polls.
- A Texas voting rights bill that Biden criticized did not pass late overnight, as Democrats who had called it an attempted suppression left chambers ahead of the vote.
- Colombian President Ivan Duque has deployed more troops in the city of Cali and the surrounding area after heavy clashes that have killed at least 14 people since Friday.
Thanks to the more than 50 people who answered our Friday quiz question and congratulations to Stephen Cardone, who was the first to name Cuba as the nation betting it can solve a worsening Covid-19 crisis. – even with vaccines made by local laboratories.
and finally … Since Carlos Ghosn’s dramatic escape from Lebanon a year and a half ago to avoid a trial in Japan, his main legal risks have shifted to France, where the former auto executive is accused of ‘having siphoned off funds from Renault to pay for a yacht and that of his wife’s birthday party at the Palace of Versailles. From today, French investigators will question the former president of Renault, Nissan and Mitsubishi Motors in Beirut.
– With the help of Alan Crawford, Michael Winfrey and Gordon Bell