According to Patrick’s proprietary model, the Chinese economy is expected to continue its dramatic growth curve for the foreseeable future. Unlike many other countries covered by this model, China’s growth is not fueled by population growth. Instead, it is driven by a quickly increasing per capita income and standard of living, discussed in more detail below. However, while economic growth will continue to outpace most of the world, it will not be as robust as it has been for the past 30 years.
Patrick’s model calculates a relative low level of political volatility for China in the coming decades. The reason for that is a relative “youth deficit” that has resulted from China’s one-child policy. When a country has a smaller portion of young citizens, political volatility tends to go down. However, this does not preclude sporadic unrest during slow years. It has been suggested that China needs to maintain a 7.5% annual growth rate or higher to avoid social unrest. While future growth looks good, there is certainly a very high probability that their economy will soften during the fluctuations of the global business cycle. During those times, when unemployment is higher and the division between rich and poor becomes more stark, volatility will surely follow.
The big surprise below is that the Chinese population will actually shrink by 5% between 2010 and 2050. Currently, the population is still rising and will continue to do so until about 2025, topping out at about 1.39 billion. But thereafter, the population drops quite quickly to about 1.27 billion in 2050. As a result, that 25-year period (from 2025 to 2050) is expected to be a much more difficult time for China. Economic growth will slow and volatility will rise. The gender gap (resulting from the one-child policy) may contribute to social unrest during that time period.
The interesting thing below, once again, is the relative “youth deficit” that China has when compared with the rest of the world. Also, note the significant increase in older retired citizens by 2050. Although not an issue today, that older generation will act as an anchor on the Chinese economy in the decades ahead. It’s also worth pointing out that consumer spending in China represents the smallest percentage of GDP of all the nations covered by this model with the exception of Saudi Arabia. In the case of Saudi Arabia, it’s because of the massive oil export business but for China, it’s also because the government and business communities are investing heavily in capital infrastructure. Those investments are another reason why Chinese productivity (and per capita income) will continue to increase over the years ahead.
Patrick is an award-winning author and keynote speaker who can speak about demographic trends affecting China at conferences and business events in Beijing, Shanghai, Chongqing, Guangzhou, Hong Kong, Macau, Shenzhen, Tianjin or other Chinese destinations.
DISCLAIMER: Projected results are NOT guaranteed. The forecasts for China above were calculated based on projected population data obtained from the World Bank website. The economic forecast used this demographic data along with adjusters for net exports, relative age distribution and per capita income projections. The political volatility forecast used the same demographic data along with adjusters for youth population percentage, projected economic growth and public government debt level. Please see the model methodology for more details.
Patrick Schwerdtfeger maintains a video blog entitled “Strategic Business Insights” and adds new videos on a regular basis. Some of the videos are ‘macro’ covering topics like global business trends and geopolitical dynamics. Others are ‘micro’ covering communication skills and your mental mindset. Access them here:
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