China's Reckoning: Demographic Collapse

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The real question is whether China can industrialize its huge rural population to mitigate this.

👍︎︎ 38 👤︎︎ u/irene_from_oslo 📅︎︎ Mar 02 2021 🗫︎ replies

I have little doubt they'll find a solution. This strikes me almost as wishful thinking by people who want America to stay on top no matter what, even if I engage in that sometimes too

👍︎︎ 39 👤︎︎ u/Z31ro 📅︎︎ Mar 03 2021 🗫︎ replies

I fucking love Polymatter. Excited for the rest of this series.

👍︎︎ 3 👤︎︎ u/jeanvaljean91 📅︎︎ Mar 03 2021 🗫︎ replies

The Video makes some very intresting points. I wonder if the U.S. will have a population reckoneing as well. Hopefully immigration can help mitigate the issue.

👍︎︎ 5 👤︎︎ u/fordfan567 📅︎︎ Mar 02 2021 🗫︎ replies

Inshallah

👍︎︎ 5 👤︎︎ u/fishlord05 📅︎︎ Mar 03 2021 🗫︎ replies

!ping CN-TW

👍︎︎ 1 👤︎︎ u/Extreme_Rocks 📅︎︎ Mar 03 2021 🗫︎ replies
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In December 1988, the leaders of China and India met for the first time in nearly three decades. The summit, which came after years of tense border disputes, marked a turning point towards friendlier relations. It was a time of hope. A China in transition. The range of possibilities, then, was wide, and as the millennium came to a close, all eyes were on the future of the continent. Amidst this optimism, China’s leader, Deng Xiaoping, was skeptical. Despite what people have predicted, he cautioned, there was no guarantee of an “Asian Century”. Nevermind that he coined this term with hesitation, the concept of an “Asian Century” would soon take on a life of its own thanks to a pattern of successes: There was its relatively stronger performance during the 2008 financial crisis, the rapid growth of its “Four Tigers” — Hong Kong, Singapore, South Korea, and Taiwan, And, of course, its explosive population and middle class. The basic premise was that, as Asia’s supply chains integrated, its navies modernized, and trade dominated, this momentum would shift the global center of gravity to The East. This notion — increasingly rephrased as the “Rise of China” — escaped the fringes, entered the public consciousness, and was thoroughly beat into all of our heads. Though likely to evoke different emotions, its truthfulness was no longer controversial. And then, no longer even interesting. A cliché. It’s not hard to see why. It contextualizes and attaches an enviable momentousness to the present moment in time. In just two words, it neatly encapsulates three centuries of history into that of Europe, America, and now, Asia. It seems to confirm what we already know, in a way that suggests a larger trend, a narrative. At the same time, the nebulousness of what it implies in concrete terms helped it evade scrutiny and take on several independent meanings. After years, now, decades, of snowballing predictions, optimistic models, bestselling books, and emotive profiles designed to stoke fear, After 10,000 repetitions of the “Next Superpower”, “Great Power Rivalry”, “China’s Grand Strategy”, and “the Remaking of the World Order”, This once very simple idea has lost all sight of reality. Like an overvalued startup, unchecked hyperbole has driven its mental market share way out of proportion. Beneath the mountains of wishful thinking and grandiose predictions, there is merit, make no mistake. But it's time for a return to the fundamentals. A reckoning is long overdue. This is part one. We begin with the challenge to China’s supremacy which underpins all others. One so insidious that it can only be solved, by its very nature, over the course of decades. China will soon run out of people. Sponsored by CuriosityStream and Nebula — where you can watch the extended version of this video. The absolute size of a population says a lot about it. In the broadest of strokes, a big country buys more things, giving it greater leverage. A tiny country, on the other hand, will more likely rely on its neighbors. None of this is revolutionary. Which is to say there’s a good reason that, when we talk about the ‘size’ of a country in relation to its global significance, we’re usually referring not to its square footage but number of unique humans. The problem is that this number can also be just as misleading as it is useful. When we compare population sizes, we mentally take for granted a “typical nation”. We imagine, in other words, a similar proportion of doctors, students, seniors, babies, and plumbers — a reasonable shorthand for 90% of conversations. This, however, is one of the remaining 10. Big, uniquely-consequential countries get that way by adopting big, uniquely-consequential policies, which means this single number just won’t cut it. Ideally, we could visualize each individual person, along with their education, occupation, and household size — things which, on average, are known to affect their nation as a whole. But, in the absence of some revolution in infographics, demographers have settled on the next best thing, realizing that just one number is remarkably accurate at predicting your ‘contribution’ to the country — age. To show this, a “Population Pyramid” splits a country into age cohorts. The longer the rectangle, the larger that share of the population. The magic thing about age is that while sure, the precise boundaries of things like ‘retirement’ and ‘adulthood’ may differ slightly between countries, cohort behavior is tied to a set of universal, biological facts which transcend culture. Now, let’s add some detail to be more scientific, and see what those looks like. I promise this is going somewhere. The first group are Seniors. With only their savings remaining, retirees are low spenders, have little room for risk and, thanks to their prudence, are of the least interest to most marketers. The second group are the Producers — and, economically, the only one that matters. During our thirties and forties, we reach the peak of our earning potential, and put all that money into stocks, retirement funds, and expensive vacations. Another name for this group might be the “Greats”. Nearly all of the world’s Nobel Prize Winners and great inventors were in this age bracket. The average age of top startup founders is 45. These individuals have an outsized influence on the world, and thus, even a small change in their size ripples throughout the nation. Next are the borrowers — students, fresh graduates, and the drivers of demand for loans. Finally, and most useless of them all, are babies — little money eating machines which — conveniently — wait several decades before offering anything of value. Alright, now that we’ve defined each cohort, we can begin to see why their relative size is where the magic happens. While there may not be a single most optimal shape, there are certainly more and less desirable shapes, economically speaking. And each kind of imbalance will lead to a different kind of problem or benefit. To show this, let’s imagine the unrealistic extremes: If 90% of a country were babies, we’d have a national babysitter shortage, lots of crying, and not much else. If 90% were aged between 30-60, it’d be amazingly productive — punching well above its weight class, with no dependents to care for. But, fast forward 20 years and it would all come crashing down as they all retired at the same time and waited for social security which there’d be no one left to pay for. Expect total social collapse. Now, none of this is to discount the role of culture, political system, physical environment, or any other factor, for that matter. All of these things play a role — but think of them as a few of the necessary ingredients — the egg, sugar, and butter to demography’s flour. Without the ingredient of functional government, you can’t bake the cookie. But no matter how effective the government, how strong the military, or influential the economy, none of it is sufficient if you’re missing the final key ingredient: the right population. Another way of saying this is that, by looking only at the shape of a country’s population — without any absolute numbers or extra information— we can already get a sense of its range of possible futures. We can tell, for example, that this super-fast-growing country has a massive opportunity. If it industrializes fast enough, it could harness this large working-age cohort with few dependents, to modernize and raise the standard of living. If those in power fail to manage that transition, the larger population will only mean more starvation, more disease, and less land. This is Nigeria. Likewise, we can conclude that this one has just experienced decades of miraculous growth, but will soon, and very quickly, age, shrinking considerably in the process. How the government responds will determine whether this is merely disastrous or truly catastrophic. This is China. Its past forty years of celebrated growth — the basis for predictions of China’s rise, the source of general optimism, the trend which many assume will continue — coincides with this hump in the pyramid — which represents tens of millions of extra people in their prime working years. Everything that made China what it is today has relied on a large, young, and productive workforce. Now, that workforce is about to succumb to biology just as every other generation has in every other country, ever. Graphs describing China tend to take this shape, but demographers know better. They know that this has only been a temporary, transitional state on the road to industrialization. It even has a name. It’s called a “Demographic dividend”. During this time, life expectancy is still catching up, meaning there are few retirees. At the same time, fewer babies are being born as women receive access to education. For these few years — and only these few years — the country in transition has all the manpower in the world, which, when well-coordinated, translates to exceptional economic growth. There’s a painful flipside, however. What looks like a ‘dividend’ will eventually feel more like a loan. The scary thing about retirement is that it happens all at once. While income tends to rise steadily throughout your career, it doesn’t much fade away at 65. One day, you retire, and that day, your income falls to 0. Which is to say, in a few years, these workers will retire, moving the pyramid upward, and leaving the country’s future to this shrinking base. And it will happen all at once. Remember: This ‘little’ hump was behind the last few decades of growth, and this ‘little’ dip represents its future. China’s working-age cohort grew from 58% of the country in 1978 to 74% in 2010. But in less than twenty years, the UN predicts that number will be roughly back where it was in ‘78. By then, China will have twice as many seniors as children under 15. And at the end of this century, its total population will be cut in half. You might think that, having worked during this growth phase, China’s elders will be well prepared for retirement. But its per capita wealth remains low, on the level of Mexico, the Maldives, and Kazakhstan. That means this mass of retirees won’t just contribute less to the economy, but will also require immense financial support — the kind China’s fractured pension and healthcare system isn’t remotely prepared for. Put simply: All of China’s recent progress has been bought on credit, and it’s finally coming time to repay. Now, why, you might ask, can’t Chinese people simply have more babies? If families were once larger, why can’t they just return that way? Recall, however, that because of the 20-year gap between a baby born today and its first real contribution to society, the damage is already done. Demography plays out over the course of generations, and today’s smaller baby cohort will mean even fewer babies when they reach adulthood. But fine, setting aside that this problem can only be solved in a minimum of two decades even if the solution were known and implemented tomorrow, remember what we’re talking about. It’s easy to get lost in the language of ‘generations’ and ‘cohorts’ — demography can unfortunately be dehumanizing — and, in the process, lose sight of what ‘fertility’ really means: the very complex decision of adults to have children. Some of this choice is beyond the reach of government. Perceptions of parenthood, tradition, and family are, first and foremost, formed based on one’s own family. Unfortunately for China, the One-Child Policy has set the cultural expectation firmly at one. And one just isn’t enough. Assuming it takes two people to make a baby, together they need at least two just to replace themselves, plus a small fraction more to account for early deaths. That means a country needs a “Total Fertility Rate” — the number of children the average woman will have in her lifetime — of 2.1 — just to sustain its current population. China’s is currently 1.6 — if you believe the government. If you don’t believe the average Chinese woman has 1.6 children in a country where the vast majority were, until recently, only allowed to have one, then you might be tempted to believe someone like Yi Fuxian, a scientist at the University of Wisconsin-Madison who estimates the true number at 1.18. To get a better sense of just how hard this problem is, think of fertility rate as an ungainly machine controlled by 100 different unlabeled levers. Policymakers know of at least a few levers that will predictably lower the TFR, but once the machine has slowed, there’s neither a clear way of getting it going again, nor any proof that it’s even possible at the scale necessary. There is, on the other hand, precedent for these attempts failing, even by proud and authoritarian Singapore. But before we pour salt on this demographic wound, let’s be fair and start with the positive… For starters, Chinese workers are becoming better educated, meaning it will take fewer workers to make the same economic contribution. And to the extent that automation replaces labor, the need for a strong working-age population may diminish, leaving China with the same old challenges faced by other automated countries. It would also be unfair not to mention that China’s problem stems from a few strictly good developments: Women are choosing to have fewer babies because they can, and seniors are living longer thanks to a rise in standards of living. These richer, longer, more fulfilling lives have value on their own. Now, a summary of the bad news: * There’s a lack of reliable data and reporting, which means no one truly knows how bad the problem is. * The simultaneous rising life expectancy means seniors will burden the economy for longer than ever. * China’s preference for male babies means that between 2020 and 2060, there will be roughly 3 single men for every 2 single women. * There’s the impact of the Coronavirus pandemic, whose slowing of fertility may simply hasten the inevitable, or permanently make things worse — both scenarios bad. * Compounding the problem is the government’s unwillingness to accept blame and reverse course. After 35 years of the One-Child Policy, there’s a desperate need to justify its costly existence. As of 2015, most families are allowed only two children, and even that change in policy has had little effect. * Finally, there’s the slow and invisible nature of the problem. Consider the last time you saw a news headline about declining births. Like climate change, there will always be a more ‘urgent’ crisis that takes precedence. And because the effects of a demographic crisis are felt over years, not days, those who highlight the problem will be labeled by many as melodramatic. In other words, the slowness of the problem makes it harder, not easier, to mitigate. While these facts have been known for years, only last year did we receive authoritative confirmation, in China’s 2020 Census, which tallied 14.65 million births the previous year — the lowest level since 1961. With our fears confirmed, now, the question turns to: Just how bad will the fallout be? Perhaps the closest comparison is the fate of Japan — also once a fast-growing economy hailed as the “next superpower” and also aging. With a median age of 48.6, Japan is the 2nd oldest place on earth. Today, its share of the world’s manufacturing exports has fallen from 12.5% to just 5.2. Japan did not fade into global irrelevance. It’s still a great power. But it never fulfilled what once seemed certain: its rise to rival the U.S. as a superpower. And it never will. China’s ‘repayment’ of its demographic loan will, at a minimum, place a severe strain on its economy. With this strain will likely come a sobering reassessment of its rise. Demography alone cannot predict the future, and it would be foolish to forecast specific social or political implications, but one cannot help but wonder: What drastic things does a nation do in this limited window of time before its power wanes? What does a generation of young people think when they face far more challenging prospects than did their parents? And what culture develops in the absence of any hope for marriage among 34 million men? Deng Xiaoping may have indeed been right when he cautioned the “Asian Century” may never arrive. And we’re just getting started. China’s demographic crisis will soon seep into its single biggest driver of growth: the illusive and out-of-control property market. Housing is China’s next reckoning — a topic that deserves its own video — next time, in Part 2. In the meantime, you may have noticed that the U.S. also has a TFR of 1.7 — well below replacement level. Does this mean it, too, is in for a similar fall? Find out why or why not in the bonus section which replaces this on Nebula. Nebula is the streaming site I helped create to give a home to more experimental, long-form, and special videos, like Mustard’s beautifully-rendered tribute to the F-117 Nighthawk, Rene Ritchie’s mini-documentary looking back at the introduction of the iPhone, and much, much more. There are no ads, videos are available early, and you can watch entirely exclusive original content. We’ve partnered with CuriosityStream — home to great documentaries on technology, history, and science — like this one about the great economist Milton Friedman — so that you can get it and Nebula for less than $15 a year. Sign up with the link in the description and watch the extended version of this video over on Nebula.
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Channel: PolyMatter
Views: 1,171,532
Rating: 4.8564053 out of 5
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Length: 21min 8sec (1268 seconds)
Published: Tue Mar 02 2021
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