Thomas F. O'Neill
I have been following the economic news in America from my home here in Suzhou, China. The U.S. economy appears to be on the rebound and perhaps America’s unemployment rate will continue to fall even further.
While the economy in America is picking up pace the Chinese economy is slowing down a bit. Many economists still believe that even with the Chinese economic slowdown they still have the economic staying power to overtake the U.S. economy by 2025.
The future for China though is not all sunshine and roses due to its country’s changing demographics. China is facing a rising aging population and their labor force is declining. Two decades ago China’s workforce was on the rise which contributed to its remarkable economic boom.
Higher wages for China’s workers and the aging population are major factors contributing to China economic slowdown. A decade ago wages stayed unchanged making China the most competitive economy in the world.
China’s goal is to increase production on China’s brand name products, specifically for the Chinese market, rather than relying solely on the production of foreign products for the global market.
Most of the high-tech products made in China are made for foreign companies. China’s workforce is currently producing 83% of all the high-tech products being shipped abroad for foreign corporations.
China is always looking for innovative ways to build its domestic economy by continuously producing new products specifically for the Chinese market. With increased wages for the Chinese labor force China is hoping its workers will have the disposable income to grow its domestic economy.
Modern technology and today’s medical advancements are contributing to people living longer and this of course is leading to China’s growing aging population. Many years ago before China’s one child policy was put into effect the elderly were cared for by family members at home. This is no longer the case in China and over the next 20 years or so the dependency ratio will only increase and more elderly will become dependent on the Chinese government to be provided for.
In 2015 China may lift its one child policy due to growing concerns about the wellbeing of its future elderly but only time will tell.
China’s population will peak to 1.5 Billion in 20 years and then slowly decline to under a Billion people by the end of the century. In 2027 India will be the most populated country in the world and perhaps the most impoverished.
There are currently 4 Chinese for every 1 American and China’s workforce is four times larger than our U.S. labor force. As America’s population continues to increase there will be approximately 1.9 to 1.25 Chinese for every 1 American by the end of the century. The effect the declining population will have on China’s economic future is uncertain.
China also has a goal of seeing to it that 90% of China’s youth go on to higher learning in Universities and Colleges. This may also affect their labor market where the educated may turn from manufacturing to more innovative ways to earning a living. Many factories may turn to robotics to produce products that were once made by human hands.
On a brighter note: China has raised over 400 Million people out of poverty in the last 20 years through education and job growth. Education has also created boundless opportunities for China’s youth and that will continue well into China’s future.
In the past 20 years China has emerged as the world’s number two superpower and a fierce global competitor. They are most likely on the road of overtaking our U.S. economy in the near future and they have certainly overcome many challenges along the way. The Chinese Government has overcome those challenges because it has the will of the people behind them and that is crucial for their sustained success.
China as a nation however is nowhere near perfect and it is far from being a perfect society but perhaps their ability to implement change is a crucial element for their future wellbeing. The Chinese are willing to make whatever changes are necessary for the wellbeing of its nation and people. I believe they can sustain that success well into the far future if they continue to adapt with the changing times and address the needs of their people.
Always with love from Suzhou, China
Thomas F O’Neill
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