China’s twin crises
Islam News – At the World Economic Forum in Davos, Switzerland, China sought to reassure the world that its economy was back on track. A delegation told world leaders that business could return to normal now that the country has relaxed its “zero Covid” policy.
But China’s projected resilience does not align with two major revelations about its long-term health and stability.
Yesterday, China revealed that its economy had just had one of its worst performances since 1976, the year Mao Zedong died. Its economy grew by just 3 percent, far short of its 5.5 percent target.
Perhaps more consequential, China also revealed that its population had shrunk last year for the first time since the Great Leap Forward, Mao’s failed economic experiment.
In the population data, experts see major implications for China, its economy and the world. Births in China have fallen for years, and officials have fought to reverse the trend. They have loosened the one-child policy and offered incentives to encourage families to have children. Those policies did not work. Now, some experts think the decline may be irreversible.
A shrinking Chinese population means that the country will face labor shortages in the absence of enough people of working age to fuel its growth. By 2035, 400 million people in China are expected to be over 60, nearly a third of its population. That will have major implications for the global economy; the country has been the engine of world growth for decades.
Context: The problem is not limited to China. Many developed countries are aging, and toward the middle of this century, deaths will start to exceed births worldwide. The shift is already starting to transform societies. In East Asia, people are working well into their 70s, and in France, an effort to raise the retirement age from 62 to 64 is expected to expose older workers to hiring discrimination.
Opinion: China’s population decline creates two major economic challenges, writes Paul Krugman. The state pension system will struggle to handle the unbalanced ratio of older adults to the working population. And the decline may harm China’s overall productivity.
Source: The New York Times