December 22, 2010


When China Ruled the World: Or why the "China Century" will be the shortest on record (Thomas P.M. Barnett, 12/21/10, Esquire)

Step No. 1: Demographics, or the Birth of a Nation of Selfish "Little Emperors"

Deng got things rolling in 1979 with his controversial one-child policy, which has to date wiped an entire America's worth of souls (three hundred million) from the ledger. The demographic dividend was substantial: China's ratio of dependents-to-workers dropped steadily over the next three decades as fewer kids entered the system and the percentage of elders held steady.

That labor boost established the so-called China price by making its labor the cheapest in the dependable world. By inserting itself at the top of numerous global production chains, China became the assembler of last resort and thus consolidated Asia's existing trade imbalance with the West. Two and a half trillion dollars of accumulated reserve currencies later, China's economic "genius" is hailed around the planet, even if all it did was out-Asia the rest of Asia by pushing aside all the other piglets suckling at Mama America's teat.

But as the recent global financial crisis made clear, that pig-out strategy has exhausted itself, meaning China needs to rely more on internal consumption for future growth. That's no easy pivot to engineer, and yet it's made all the more imperative by this year's closing of China's demographic golden hour — meaning, from here on out, fewer new workers enter the labor pool (one-third less sixteen- to twenty-four-year-olds over the next twelve years), while many more elders exit it.

That dual dynamic will not only age China more rapidly than any nation in human history — by 2050 China will have more old people (four hundred million-plus) than America will have people (four hundred million) — it will dramatically drive up the price of its factory labor in coming years. That irreversible pathway is already presaged by last year's highly successful worker strikes along the industrialized coast, with wages lifted by a quarter on average. China's "factory girls" are looking to upgrade far more than just their wardrobe, and that means the nation will increasingly export low-end manufacturing jobs to all those neighboring capitalist running dogs (Bangladesh, Vietnam, etc.) nipping at China's heels.

As a result, China is forced to move up the production chain as rapidly as possible to generate the higher wages increasingly demanded by hard-pressed workers facing the "4-2-1 problem" — namely, four grandparents and two parents expecting their sole offspring to provide in their old age. But guess what? After being raised as "little emperors" within their pointy family pyramids, these young'uns ain't exactly looking to "eat bitterness" like their long-suffering parents did. They want careers and not just jobs, and will seek personal satisfaction in their modern lives, not merely lifelong sacrifice.

Some Western demographers have posited, due to the female shortage created by the one-child policy, that China will be forced to field a vast force — as in tens of millions strong — of wifeless men who'll gladly wage wars around the planet to burn off all those unrequited hormones. My guess is that mama's only boy, as overweight as he's fast becoming, will be looking for a cushier route to rid himself of all those ancestral expectations.

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Posted by Orrin Judd at December 22, 2010 5:34 AM
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