{"id":35635,"date":"2023-10-25T22:38:47","date_gmt":"2023-10-25T22:38:47","guid":{"rendered":"https:\/\/innodebt.com\/news\/opinion-china-is-ignoring-this-painful-achilles-heel-threatening-its-economic-growth\/"},"modified":"2023-10-25T22:38:50","modified_gmt":"2023-10-25T22:38:50","slug":"opinion-china-is-ignoring-this-painful-achilles-heel-threatening-its-economic-growth","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=35635","title":{"rendered":"Opinion: China is ignoring this painful Achilles\u2019 heel threatening its economic growth"},"content":{"rendered":"

Chinese President Xi Jinping recently\u00a0sought to assure\u00a0a bipartisan delegation of U.S. senators that China and the United States could still avoid a military confrontation despite the rising tensions between them. \u201cThe Thucydides Trap,\u201d he\u00a0said, \u201cis not inevitable.\u201d<\/p>\n

The term \u201cThucydides Trap,\u201d a reference to the ancient Greek historian\u2019s account of the Peloponnesian War, was\u00a0coined\u00a0by political scientist\u00a0Graham Allison\u00a0to describe the seemingly unavoidable conflict that arises when an emerging power such as China challenges an established hegemon like the United States.<\/p>\n

\n

Allison argued that China will eventually overtake the U.S. as the world\u2019s largest economy, a notion bolstered by Chinese government economists who predict that the country\u2019s GDP will be\u00a0twice as large\u00a0as America\u2019s by 2030 and\u00a0three times as large\u00a0by 2049. Such forecasts have fueled strategic anxiety among many US politicians and scholars wary of China\u2019s growing economic clout and geopolitical aspirations.<\/p>\n

Allison\u2019s thesis seems to have found a\u00a0receptive audience\u00a0within Chinese leadership circles. In fact, the Chinese economy\u2019s explosive growth \u2014 GDP has\u00a0skyrocketed\u00a0to 76% of comparable U.S. GDP in 2021 from 7% in 1990 \u2014 has evidently convinced policymakers in both China and the U.S. that the Thucydides Trap is indeed inevitable.<\/p>\n

But, to borrow again from ancient Greece, these predictions fail to account for China\u2019s Achilles\u2019 heel: its bleak\u00a0demographic\u00a0outlook. An aging population can hinder production, reduce consumption, stifle innovation, undermine public morale, and erode economic vitality. In the 2007 edition of my book\u00a0Big Country with an Empty Nest<\/em>, I likened China\u2019s demographic trajectory to a sprinter \u2014 quick but lacking stamina. By comparison, both the U.S. and India are marathon runners, poised\u00a0to\u00a0dominate\u00a0the 21st century.<\/p>\n

Japan, which I likened to a middle-distance runner, provides a cautionary tale. With a rapidly growing workforce and a young population, Japan\u2019s GDP\u00a0soared\u00a0from 8% of America\u2019s in 1960 to 73% by 1995. In 1994, however, its prime-age labor force (15-59) began to decline, and it has since\u00a0trailed\u00a0the U.S. by every demographic measure. Japan\u2019s economic growth rate has been lower than America\u2019s since 1992, and its GDP has\u00a0fallen to a mere 16%\u00a0that of the U.S. in 2023.<\/p>\n

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<\/p>\n

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\n \u201c<\/span> Italy\u2019s experience underscores the danger of ignoring demographic shifts. \u201d<\/span>\n <\/p>\n<\/p><\/div>\n<\/p><\/div>\n

Italy\u2019s experience underscores the danger of ignoring demographic shifts. The country\u2019s prime working-age labor force has been\u00a0shrinking since 1993, and its population is significantly\u00a0older\u00a0than that of the U.S. Consequently, its GDP has\u00a0dropped\u00a0from 20% of America\u2019s in 1992 to 8% this year.<\/p>\n

China\u2019s population aged more rapidly than previously predicted, and its fertility rate (births per woman) has been\u00a0lower\u00a0than that of the U.S. since 1991 and below those of Japan and Italy\u00a0since 2021. China\u2019s prime-age labor force began to\u00a0shrink\u00a0in 2012, signaling the end of its three-decade run of double-digit GDP growth.<\/p>\n

In the decade since then, the gap between the Chinese and U.S. economies continued to narrow, partly owing to China\u2019s\u00a0massive housing bubble. But by 2031-35, China will\u00a0lag behind\u00a0the U.S. in every demographic metric, and its GDP growth rate will likely fall below America\u2019s. Chinese GDP has\u00a0fallen\u00a0from 76% of America\u2019s in 2021 to 66% in 2023. While this decline is likely the result of short-term fluctuations, it could foreshadow a widening economic divide between a rapidly aging China and a largely middle-aged U.S.<\/p>\n

Read: <\/strong>America\u2019s getting older \u2014 and, actually, that\u2019s good news for the stock market<\/p>\n

America\u2019s demographic advantages have played a crucial role in maintaining its global dominance. Its post-World War II baby boom, for example, exceeded Europe\u2019s. Moreover, the U.S. experienced a second baby boom from the late 1970s to the mid-2000s, as its fertility rate\u00a0increased\u00a0to 2.1 in 1990 from 1.74 in 1976, and remaining stable until 2007.<\/p>\n

Over the same period, the European Union\u2019s fertility rate fell to 1.52 from 2.06. By 2008, the\u00a0median age\u00a0in the EU was four years higher than in the U.S. Moreover, while the EU\u2019s prime-age labor force\u00a0began\u00a0to decline in 2008, America\u2019s workforce is expected to remain steady until 2048. Unsurprisingly, EU GDP, which was 1.1 times that of the U.S. in 2008, has\u00a0fallen to 68%\u00a0of the U.S. level in 2023.<\/p>\n

<\/p>\n

<\/p>\n

\n

\n \u201c<\/span> The U.S. often struggles to address its demographic challenges effectively. \u201d<\/span>\n <\/p>\n<\/p><\/div>\n<\/p><\/div>\n

But the U.S. has its own reasons for concern. America\u2019s\u00a0fertility rate fell\u00a0to 1.67 in 2022 from 2.12 in 2007, and is expected to decline further as more women\u00a0delay marriage\u00a0and childbirth and as male labor-force participation\u00a0declines.<\/p>\n

Moreover, the U.S. often struggles to address its demographic challenges effectively. Despite\u00a0spending more\u00a0on\u00a0health care\u00a0than any other country, the U.S. has the\u00a0shortest life expectancy\u00a0in the developed world. Alarmingly,\u00a0one in 25 American five-year-olds\u00a0today will die before their 40th birthday, with drug overdoses and gun violence among the leading causes. These demographic shifts could lead to an economic slowdown, undermine political cohesion, and even endanger American democracy.<\/p>\n

Both China and the U.S. have entered a period of economic and political turmoil characterized by strategic anxiety and heightened risk of miscalculation. Both also seem to downplay the severity of their respective demographic crises. Left unaddressed, China\u2019s demographic trap could precipitate a civilizational collapse.<\/p>\n

Meanwhile, the U.S. could find its global influence diminished. Whereas it once single-handedly shaped the international order, its ability to preserve global stability now hinges on the cooperation of its allies and engagement with China. Given the demographic challenges facing both countries, however, the anticipated Thucydidean clash of titans might ultimately resemble a schoolyard scuffle.<\/p>\n

Yi Fuxian, a senior scientist in obstetrics and gynecology at the University of Wisconsin-Madison, is the author of\u00a0 \u201cBig Country with an Empty Nest\u201d\u00a0(China Development Press, 2013).<\/em><\/p>\n

This commentary was published with the permission of\u00a0Project Syndicate\u00a0\u2014
China\u2019s Demographic\u00a0Achilles\u2019 Heel<\/strong><\/em><\/p>\n

Also read:<\/strong> <\/strong>Chinese stocks have erased 4\u00bd years of gains as foreign investors flee at record pace<\/p>\n

More:<\/strong> Israel-Hamas war could be the tipping point for a fragile financial system<\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Chinese President Xi Jinping recently\u00a0sought to assure\u00a0a bipartisan delegation of U.S. senators that China and the United States could still avoid a military confrontation despite the rising tensions between them. \u201cThe Thucydides Trap,\u201d he\u00a0said, \u201cis not inevitable.\u201d The term \u201cThucydides Trap,\u201d a reference to the ancient Greek historian\u2019s account of the Peloponnesian War, was\u00a0coined\u00a0by political […]<\/p>\n","protected":false},"author":1,"featured_media":35636,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[38],"tags":[],"class_list":{"0":"post-35635","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"\nOpinion: China is ignoring this painful Achilles\u2019 heel threatening its economic growth | Innodebt<\/title>\n<meta name=\"description\" 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