China Isn’t Growing Too Fast – It’s Growing Too Slowly
You probably don’t read the Economist, because, well, does anyone? (I’ve long suspected that most subscribers to the stultifying magazine use it as little more than coffee table ornamentation.) That said, I did somehow come across this item from last week’s issue, which asked the question, ‘Is China’s Economy Growing Too Fast?’
As is often case, entirely the wrong question is being asked by the mainstream media, however: for China’s economy is most certainly not growing too fast. Indeed, if anything, it’s growing too slowly.
China has a limited time in which to bulk up its infrastructure and consumer economy. A persistent and uncomfortable truth that Sinoboosters continue to ignore is that come 2020, the labor force in the Middle Kingdom will begin to shrink. A phenomenal dispatch published last summer by the Los Angeles Times (one that I cannot link to enough) laid out the problem in stark detail: by 2030, 40% of the Chinese population will be over 60, and there will be a mere 2.5 workers for every retiree. By 2050, there will be 1.6 workers for every pensioner.
A declining labor force will mean just that: fewer people to power Chinese development. Thus, the Chinese government needs to invest in construction and massive infrastructure developments while it still has the manpower to do so.
Happily, this is so far the case – Beijing’s stimulus bill poured hundreds of millions of dollars into pouring hundreds of millions of gallons of concrete: that is, towards construction projects. But the country still has a tremendously long distance to travel. Waking up in Shanghai each morning last year, I was faced with a dilemma: commute via the underperforming, overcrowded subway and face danger to life and limb, or commute via taxi, and end up spending hours stuck in traffic. And bear in mind that this appalling infrastructure situation was in China’s most economically developed city.
There are two possibilities facing China. The country could go the way of Germany or Japan, and enjoy a peaceful, comfortable, and prosperous period of aging and population decline. (Indeed, I suspect that overly crowded Japan will be a much more livable and pleasant society with a smaller population.) Or, China could, as many fear, “grow old before it grows rich.” A China that begins to age while it is still underdeveloped and impoverished will mean generations of hardship for hundreds of millions of Chinese people.
It goes without saying that China’s economic growth is “unsustainable.” That’s just fine: nothing worth celebrating has ever been “sustainable.” But by (literally) laying the groundwork now, China can enjoy a comfortable slide into senility. If they build it, prosperity will come.