Why ageing China won’t overtake the US economy as the world’s biggest – now or in the future

[Get Ya Wig Split]

Why ageing China won’t overtake the US economy as the world’s biggest – now or in the future

• 
  Growth trajectories must take into account that China is ageing faster than the US. The experiences of Japan, Taiwan and South Korea bear out the correlation between growth and demographics, and economists optimistic about China’s growth prospects should take note

In 2010, China replaced Japan as the world's second-largest economy. Many economists believe it is just a matter of time before China dethrones the United States as the world’s biggest economy – some have argued that it could happen before 2030.

They have cited the history of other Asian economies as evidence to back the claim. The nominal per capita gross domestic product of China was just a sixth of America’s in 2018 – a level similar to Japan in 1960, Taiwan in 1978 and South Korea in 1986. In the following two decades, the three Asian economies achieved annual growth rates of between 7 per cent and 8 per cent. As such, economists including Justin Lin Yifu, the former World Bank chief economist, have argued that China would go through a similar trajectory and the nation would be able to achieve a 6 per cent annual growth rate from now until the 2030s.

I beg to differ, however. These optimistic forecasts of China’s economic future neglect the country’s ageing population and its drag on growth. The younger an economy’s population structure, the stronger its vitality for economic innovation. As the median age rises and the proportion of the population aged 65 and over increases, so the economic growth rate could plummet.

In 1950, the median age was 22 in Japan and 30 in the US. Japan was younger than the United States and had higher economic growth. However, the average total fertility rate from 1951-2017 was 1.77 births per woman in Japan and 2.33 births in the US, which led to a population ageing faster in Japan than in the US.

Japan’s median age and the proportion aged over 65 surpassed the US’ in 1967 and 1992 respectively. Japan’s GDP growth has been lower than America’s since 1992 (excepting 2010). The size of Japan's nominal GDP rose from 8 per cent of the US’ GDP in 1960 to 71 per cent in 1995, and then fell to 24 per cent in 2018.

Taiwan and South Korea had similar experiences. In 1960, the median age was 20 in South Korea and 17 in Taiwan, versus 30 in the US. However, in 2018, it was four and three years older than the US’ respectively. The nominal GDP of Taiwan and South Korea was only 0.3 per cent and 0.7 per cent of the US GDP in 1960. It increased to 3.1 per cent for Taiwan and 7.8 per cent for South Korea in 2011, then faltered, and may gradually decrease in the future.

In 1980, China’s median age was 22, eight years younger than the US’. From 1980 to 2011, China's annual GDP growth averaged 10 per cent, faster than the US’ 2.7 per cent. The size of China's nominal GDP rose from 7 per cent of US GDP in 1980 to 49 per cent in 2011.

However, China's GDP growth slowed from 9.5 per cent in 2011 to 6.6 per cent
in 2018. The slowdown can be blamed on a variety of factors. The first and probably the most important factor is that China is getting older, partly thanks to Beijing’s ruthless one-child policy. In 2014, China’s median age had increased to 38, surpassing that of the United States.

According to the UN World Population Prospects, the US population will increase from 328 million in 2018 to 370 million in 2050.

The cultural traditions of mainland China are similar to those of Taiwan and South Korea. Average fertility rates from 2001 to 2018 were 1.14 in Taiwan and 1.18 in South Korea. If China is fortunate enough to stabilise its total fertility rate at 1.2, the total population will fall from 1.28 billion in 2018 to 1.08 billion in 2050. This decline will be accompanied by an ageing population structure. The proportion aged over 65 will rise from 12 per cent in 2018 to 22 per cent in 2033, and 33 per cent by 2050. In comparison, the proportion of those 65 and over in the US will rise from 16 per cent in 2018 to 21 per cent in 2033 and 23 per cent in 2050.

China’s median age is forecast to increase to 47 by 2033 and 56 in 2050. In the US, the median age will be 41 in 2033 and 44 in 2050. China’s working-age population aged 20-64 began to shrink in 2017, while the US working-age population will not reach its peak until 2050.

From the above, we can conclude that China's GDP growth may start to fall below the US’ in around 2033, when the proportion aged over 65 begins to exceed that of the US.

Assuming that China and the US will have GDP growth rates of 6.3 per cent and 3 per cent in 2019, and then fall to 2.2 per cent in 2033, the size of China's GDP, which was 66 per cent of the US GDP in 2018, will peak at 84 per cent in 2033.

Thus, it’s clear China's economy cannot exceed that of the United States.

Yi Fuxian is a senior scientist at the University of Wisconsin-Madison and author of Big Country with an Empty Nest

https://www.scmp.com/comment/insigh...hina-simply-cannot-overtake-us-economy-worlds

 

[Fawadqasim1]

Dil ke khush rakhne ko, Ghalib, yeh khayaal achcha hai

 

[UKBengali]

Load of nonsense.

 

[That Guy]

This guy is fucking stupid.

An aging population is a problem, and can slow down an economy, yes, but what's more important is the workforce, profit taking, investment, taxation...etc.

Automation can compensate to a big degree a decline in work force, as a result of an aging population. As long as a company is turning a profit, it is actively contributing to the national gdp. As long as a corporation is profitable, it will see investment coming in. Finally, taxation; China has a relatively poor taxation rate compared to the US, if it can increase that (and China is increasingly doing so) steadily, it can compensate for any slow down in gdp growth; Also, it's not like older people will suddenly all retire at the same time, as well, even if they do retire, it's not like they'll stop paying taxes.

Seriously, this guy makes it seem like population alone determines gdp.

China can and will exceed the US in both Nominal gdp and PPP gdp, it's inevitable. Even if China's growth rate decreases to 5%, it will happen.

[Edit] I just want to add, population just determines the ceiling of how quickly you can grow your gdp, before it becomes difficult. With a larger population, you ceiling is higher, because there are more people contributing to the national gdp. Once the ceiling is reached, the growth rate will slow down. China has not reached its ceiling yet, but it eventually will (probably around mid century).

 

[Globenim]

He raised a valid point about age no one could have actually forgotten to take into account, because "age demographics" has been a key note in the "China collapse China government bad" narrative, that's been disected and beaten to death by U.S. regime controlled propaganda mouthpieces over the past two decade, just like this piece of junk is trying to do, but jumps to pretty much unexplained bold conclusions, that sound more like he is just looking for attention and excuses to promote his book to make money of the ongoing China scare program of the U.S. regime.

 

[Beidou2020]

China has already surpassed the US in many categories including largest manufacturer, trader, energy consumption, electricity consumption, etc.

Only category US still leads in is nominal GDP, consumer market size, and various services consumption like healthcare, insurance, advertising, etc.

 

[Nan Yang]

Why ageing China won’t overtake the US economy as the world’s biggest – now or in the future

• 
  Growth trajectories must take into account that China is ageing faster than the US. The experiences of Japan, Taiwan and South Korea bear out the correlation between growth and demographics, and economists optimistic about China’s growth prospects should take note

In 2010, China replaced Japan as the world's second-largest economy. Many economists believe it is just a matter of time before China dethrones the United States as the world’s biggest economy – some have argued that it could happen before 2030.

They have cited the history of other Asian economies as evidence to back the claim. The nominal per capita gross domestic product of China was just a sixth of America’s in 2018 – a level similar to Japan in 1960, Taiwan in 1978 and South Korea in 1986. In the following two decades, the three Asian economies achieved annual growth rates of between 7 per cent and 8 per cent. As such, economists including Justin Lin Yifu, the former World Bank chief economist, have argued that China would go through a similar trajectory and the nation would be able to achieve a 6 per cent annual growth rate from now until the 2030s.

I beg to differ, however. These optimistic forecasts of China’s economic future neglect the country’s ageing population and its drag on growth. The younger an economy’s population structure, the stronger its vitality for economic innovation. As the median age rises and the proportion of the population aged 65 and over increases, so the economic growth rate could plummet.

In 1950, the median age was 22 in Japan and 30 in the US. Japan was younger than the United States and had higher economic growth. However, the average total fertility rate from 1951-2017 was 1.77 births per woman in Japan and 2.33 births in the US, which led to a population ageing faster in Japan than in the US.

Japan’s median age and the proportion aged over 65 surpassed the US’ in 1967 and 1992 respectively. Japan’s GDP growth has been lower than America’s since 1992 (excepting 2010). The size of Japan's nominal GDP rose from 8 per cent of the US’ GDP in 1960 to 71 per cent in 1995, and then fell to 24 per cent in 2018.

Taiwan and South Korea had similar experiences. In 1960, the median age was 20 in South Korea and 17 in Taiwan, versus 30 in the US. However, in 2018, it was four and three years older than the US’ respectively. The nominal GDP of Taiwan and South Korea was only 0.3 per cent and 0.7 per cent of the US GDP in 1960. It increased to 3.1 per cent for Taiwan and 7.8 per cent for South Korea in 2011, then faltered, and may gradually decrease in the future.

In 1980, China’s median age was 22, eight years younger than the US’. From 1980 to 2011, China's annual GDP growth averaged 10 per cent, faster than the US’ 2.7 per cent. The size of China's nominal GDP rose from 7 per cent of US GDP in 1980 to 49 per cent in 2011.

However, China's GDP growth slowed from 9.5 per cent in 2011 to 6.6 per cent
in 2018. The slowdown can be blamed on a variety of factors. The first and probably the most important factor is that China is getting older, partly thanks to Beijing’s ruthless one-child policy. In 2014, China’s median age had increased to 38, surpassing that of the United States.

According to the UN World Population Prospects, the US population will increase from 328 million in 2018 to 370 million in 2050.

The cultural traditions of mainland China are similar to those of Taiwan and South Korea. Average fertility rates from 2001 to 2018 were 1.14 in Taiwan and 1.18 in South Korea. If China is fortunate enough to stabilise its total fertility rate at 1.2, the total population will fall from 1.28 billion in 2018 to 1.08 billion in 2050. This decline will be accompanied by an ageing population structure. The proportion aged over 65 will rise from 12 per cent in 2018 to 22 per cent in 2033, and 33 per cent by 2050. In comparison, the proportion of those 65 and over in the US will rise from 16 per cent in 2018 to 21 per cent in 2033 and 23 per cent in 2050.

China’s median age is forecast to increase to 47 by 2033 and 56 in 2050. In the US, the median age will be 41 in 2033 and 44 in 2050. China’s working-age population aged 20-64 began to shrink in 2017, while the US working-age population will not reach its peak until 2050.

From the above, we can conclude that China's GDP growth may start to fall below the US’ in around 2033, when the proportion aged over 65 begins to exceed that of the US.

Assuming that China and the US will have GDP growth rates of 6.3 per cent and 3 per cent in 2019, and then fall to 2.2 per cent in 2033, the size of China's GDP, which was 66 per cent of the US GDP in 2018, will peak at 84 per cent in 2033.

Thus, it’s clear China's economy cannot exceed that of the United States.

Yi Fuxian is a senior scientist at the University of Wisconsin-Madison and author of Big Country with an Empty Nest

https://www.scmp.com/comment/insigh...hina-simply-cannot-overtake-us-economy-worlds

He he he. Just read all the comments.
02

RICOHFLEX77@******30 Mar 2019 - 1:20PM
No need to "overtake". The US economy is going to crash. Printing unlimited mountains of paper money fiat currency without any backing, (a.k.a Quantitative Easing) gave US population a false sense of prosperity after the Lehman Brothers financial crash in 2008. In reality, US in 2019 is already bankrupt. OIL trading used to be done exclusively in US dollar. Now US is threatening anyone who tries to move OIL trading away from US dollar base.
REPLYREPORT
00
RICHARDCHU73@****** RICOHFLEX77@******
I thought couple of country have already trading oil/gas with China with Renmibi now, these countries might be Russia, Iran and Saudi Arabia. That was another reason why Trump did not like Iran & China.
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11
ICEMAN30 Mar 2019 - 12:25PM
Crikey! Another US worshipper? Seems another religion.
REPLYREPORT
01
RICHARDCHU73@******30 Mar 2019 - 10:30AM
Has the author of this article heard about Chinese sayings of "Frog thought he knew everything when he sits at the bottom of the well", "Chinese long term definition is 50-100 years, not 3-5 years in Western World". You cannot even forecast the financial market over the next three months under Trump Administration, how do you know you could predict China cannot overtake USA economy as the World biggest - now or in the future? I thought Trump and Malcolm Turnbull have a very big ego, I was wrong because you have even bigger ego than these two "self-centre, egotistic, selfish and little men". [Note: if the author could forecast the financial/share market over the next three months, he would be multi-billionaire and he does not need to work anymore. You are wasting your time working at the University of Wisconsin, right?]

21
SOIFRCOCOSIN@******29 Mar 2019 - 10:35PM
not really true. china is on the path towards becoming a continental economy. its domestic consumption is increasing fast. u r right that export has decline. but do u know that it is self inflicted? china actively decreased its dependence on export for strategic reason. think about why china has not capiculate in this traded war? the war would have been much more effective against china if it happen 3 to 4 years ago. too bad for the yankees.
REPLYREPORT
20
BNCHI29 Mar 2019 - 9:38PM
The writer should also include the demographic profile of the higher birth rate in US. Is the higher rate coming from the Latinos and Asian? Will this not lead to very serious racial tension and affects the growth rate?
REPLYREPORT
40
RUIZHICONSULTANTS@******29 Mar 2019 - 9:18PM
Does the writer of this article realize the difference between fiction and real reporting? SCMP must do a proper audit.
REPLYREPORT
10
RICK.WN.WONG@******29 Mar 2019 - 8:36PM
I guess avg GDP cannot increase? Why doesn't this author talk about why that cannot happen?
REPLYREPORT
23
SHUIKE29 Mar 2019 - 8:04PM
The use of Median Age to compare US/China can be misleading if you do not include the SIZE of the population. Even if you HALF China’s working population by Median Age reckoning, it’ll still be more than those in the US. Plenty of young fellas to choose from! That is why the US is able to beat those Lilliput countries like Japan, S. Korea & Taiwan who can’t replace their youngsters quick enough!
REPLYREPORT
22
BERTRAND.ZHUPING@****** SHUIKE
Yeh ok, you’re right and someone who has dedicated years researching this is wrong.
He’ll be devastated.
REPLYREPORT
12
CHRIS89 BERTRAND.ZHUPING@******
The author has no academic history or experience in economics. His analysis is amateurish and ignores many important factors. He also neglected to mention that China's GDP in purchasing power parity overtook the USA in 2014.

 

[Menthol]

The author is forget about the rise of automation, robotic and ai.

 

[God Parshuram]

Why ageing China won’t overtake the US economy as the world’s biggest – now or in the future

• 
  Growth trajectories must take into account that China is ageing faster than the US. The experiences of Japan, Taiwan and South Korea bear out the correlation between growth and demographics, and economists optimistic about China’s growth prospects should take note

In 2010, China replaced Japan as the world's second-largest economy. Many economists believe it is just a matter of time before China dethrones the United States as the world’s biggest economy – some have argued that it could happen before 2030.

They have cited the history of other Asian economies as evidence to back the claim. The nominal per capita gross domestic product of China was just a sixth of America’s in 2018 – a level similar to Japan in 1960, Taiwan in 1978 and South Korea in 1986. In the following two decades, the three Asian economies achieved annual growth rates of between 7 per cent and 8 per cent. As such, economists including Justin Lin Yifu, the former World Bank chief economist, have argued that China would go through a similar trajectory and the nation would be able to achieve a 6 per cent annual growth rate from now until the 2030s.

I beg to differ, however. These optimistic forecasts of China’s economic future neglect the country’s ageing population and its drag on growth. The younger an economy’s population structure, the stronger its vitality for economic innovation. As the median age rises and the proportion of the population aged 65 and over increases, so the economic growth rate could plummet.

In 1950, the median age was 22 in Japan and 30 in the US. Japan was younger than the United States and had higher economic growth. However, the average total fertility rate from 1951-2017 was 1.77 births per woman in Japan and 2.33 births in the US, which led to a population ageing faster in Japan than in the US.

Japan’s median age and the proportion aged over 65 surpassed the US’ in 1967 and 1992 respectively. Japan’s GDP growth has been lower than America’s since 1992 (excepting 2010). The size of Japan's nominal GDP rose from 8 per cent of the US’ GDP in 1960 to 71 per cent in 1995, and then fell to 24 per cent in 2018.

Taiwan and South Korea had similar experiences. In 1960, the median age was 20 in South Korea and 17 in Taiwan, versus 30 in the US. However, in 2018, it was four and three years older than the US’ respectively. The nominal GDP of Taiwan and South Korea was only 0.3 per cent and 0.7 per cent of the US GDP in 1960. It increased to 3.1 per cent for Taiwan and 7.8 per cent for South Korea in 2011, then faltered, and may gradually decrease in the future.

In 1980, China’s median age was 22, eight years younger than the US’. From 1980 to 2011, China's annual GDP growth averaged 10 per cent, faster than the US’ 2.7 per cent. The size of China's nominal GDP rose from 7 per cent of US GDP in 1980 to 49 per cent in 2011.

However, China's GDP growth slowed from 9.5 per cent in 2011 to 6.6 per cent
in 2018. The slowdown can be blamed on a variety of factors. The first and probably the most important factor is that China is getting older, partly thanks to Beijing’s ruthless one-child policy. In 2014, China’s median age had increased to 38, surpassing that of the United States.

According to the UN World Population Prospects, the US population will increase from 328 million in 2018 to 370 million in 2050.

The cultural traditions of mainland China are similar to those of Taiwan and South Korea. Average fertility rates from 2001 to 2018 were 1.14 in Taiwan and 1.18 in South Korea. If China is fortunate enough to stabilise its total fertility rate at 1.2, the total population will fall from 1.28 billion in 2018 to 1.08 billion in 2050. This decline will be accompanied by an ageing population structure. The proportion aged over 65 will rise from 12 per cent in 2018 to 22 per cent in 2033, and 33 per cent by 2050. In comparison, the proportion of those 65 and over in the US will rise from 16 per cent in 2018 to 21 per cent in 2033 and 23 per cent in 2050.

China’s median age is forecast to increase to 47 by 2033 and 56 in 2050. In the US, the median age will be 41 in 2033 and 44 in 2050. China’s working-age population aged 20-64 began to shrink in 2017, while the US working-age population will not reach its peak until 2050.

From the above, we can conclude that China's GDP growth may start to fall below the US’ in around 2033, when the proportion aged over 65 begins to exceed that of the US.

Assuming that China and the US will have GDP growth rates of 6.3 per cent and 3 per cent in 2019, and then fall to 2.2 per cent in 2033, the size of China's GDP, which was 66 per cent of the US GDP in 2018, will peak at 84 per cent in 2033.

Thus, it’s clear China's economy cannot exceed that of the United States.

Yi Fuxian is a senior scientist at the University of Wisconsin-Madison and author of Big Country with an Empty Nest

https://www.scmp.com/comment/insigh...hina-simply-cannot-overtake-us-economy-worlds

China has fully exploited the potential of their current economic model which is labor oriented. Now China can't go beyond this in current economic model. Aging population and economic betterment has made Chana lost the advantage of cheap production. Their madness to pursue GDP by investigating in ghost cities and useless infrastructure will haunt China. China's situation is like a sports man who takes steroids to improve performance. Your performance will improve for some time but you will be useless too soon. With labor becoming costly and lack of innovation and research with entire focus on reverse engineering, it is difficult to predict China's economic future.

 

[phancong]

China has fully exploited the potential of their current economic model which is labor oriented. Now China can't go beyond this in current economic model. Aging population and economic betterment has made Chana lost the advantage of cheap production. Their madness to pursue GDP by investigating in ghost cities and useless infrastructure will haunt China. China's situation is like a sports man who takes steroids to improve performance. Your performance will improve for some time but you will be useless too soon. With labor becoming costly and lack of innovation and research with entire focus on reverse engineering, it is difficult to predict China's economic future.

India unlike China took the advantage of large Chinese young population and turned their population into the hard productive workforce for China economy transformation into 2nd place in the world, India had the wishdom to bypass the manufacture industry and jumped right in the service base economy for India economy grown model, easily for Indian to find a back-office jobs in the calling center all due to portion Indian population could spoke the broken English, no wonder China economy surpassed India in economy growth rate and 6x the India in nominal gdp.

 

[God Parshuram]

India unlike China took the advantage of large Chinese young population and turned their population into the hard productive workforce for China economy transformation into 2nd place in the world, India had the wishdom to bypass the manufacture industry and jumped right in the service base economy for India economy grown model, easily for Indian to find a back-office jobs in the calling center all due to portion Indian population could spoke the broken English, no wonder China economy surpassed India in economy growth rate and 6x the India in nominal gdp.

India is also rising . The only difference is that it is just late by one and half decade. India is a democracy so it can not act iron handed like China . India need to take people along with them . This slows the economic development but the development becomes robust. India can not follow a blanket model of development like China because of vibrancy. This slows the growth but the growth which happens addresses the need of people in best way. India has laid down a solid foundation of robust growth on which the building is being built. No matter it is late but it is worthwhile to wait a bit for solid growth.

 

[Dungeness]

India unlike China took the advantage of large Chinese young population and turned their population into the hard productive workforce for China economy transformation into 2nd place in the world, India had the wishdom to bypass the manufacture industry and jumped right in the service base economy for India economy grown model, easily for Indian to find a back-office jobs in the calling center all due to portion Indian population could spoke the broken English, no wonder China economy surpassed India in economy growth rate and 6x the India in nominal gdp.

These people are still parroting the same old BS western media has fed them for the last 30 years, and dreaming they would somehow reach the level China is today. Honestly, they need their collective IQ genetically modified so they can finally figure out as why China has been always so much ahead in the game.

 

[Placemat]

The important thing is to provide a high standard for its citizens and I thin China can do it

 

[kmc_chacko]

India unlike China took the advantage of large Chinese young population and turned their population into the hard productive workforce for China economy transformation into 2nd place in the world, India had the wishdom to bypass the manufacture industry and jumped right in the service base economy for India economy grown model, easily for Indian to find a back-office jobs in the calling center all due to portion Indian population could spoke the broken English, no wonder China economy surpassed India in economy growth rate and 6x the India in nominal gdp.

It’s true India took the route of Service Sector instead of Manufacturing as Indian planners were under the illusion that liberalized market will create jobs and spur the growth but after 1991 liberalization, it didn't happen. So, they shifted their concentration on Service Sector and rather than investing heavily on large manufacturing. They understood that a well-developed service sector will later cater the needs of Manufacturing sector. So, now they are working with service sector for uplifting its underprivileged population by providing education and skill development training's. Which in turn provide labour force for the large Manufacturing sector and which has became reality now and the economic planners know that big Manufacturing facilities will not only provide jobs but also finance for the large Infrastructure projects and naturally it will fuel the growth also.

Due to large population under poverty line and need of overhauling basic infrastructures, I would recommend India to not to follow Chinese economic model instead it will be better if we could follow US model of economy which is sustainable for longer duration.

 

[Pakhtoon yum]

This guy is fucking stupid.

An aging population is a problem, and can slow down an economy, yes, but what's more important is the workforce, profit taking, investment, taxation...etc.

Automation can compensate to a big degree a decline in work force, as a result of an aging population. As long as a company is turning a profit, it is actively contributing to the national gdp. As long as a corporation is profitable, it will see investment coming in. Finally, taxation; China has a relatively poor taxation rate compared to the US, if it can increase that (and China is increasingly doing so) steadily, it can compensate for any slow down in gdp growth; Also, it's not like older people will suddenly all retire at the same time, as well, even if they do retire, it's not like they'll stop paying taxes.

Seriously, this guy makes it seem like population alone determines gdp.

China can and will exceed the US in both Nominal gdp and PPP gdp, it's inevitable. Even if China's growth rate decreases to 5%, it will happen.

[Edit] I just want to add, population just determines the ceiling of how quickly you can grow your gdp, before it becomes difficult. With a larger population, you ceiling is higher, because there are more people contributing to the national gdp. Once the ceiling is reached, the growth rate will slow down. China has not reached its ceiling yet, but it eventually will (probably around mid century).

Apprealty, being ignorant is a blessing or so I've heard.