Wednesday, January 31, 2007

China Getting Old Before Getting Rich

Following up from my last post on low Chinese labor cost observations, the Mercury Center (website for the San Jose Mercury News) has an article "China's Getting Old Before It Becomes Rich." It's an obvious story once you think about it, but has not been covered much. The gist: China's one-child policy reduces young people while better healthcare and nutrition increase the elderly. It's the U.S. social security crisis on steroids. In one estimate, the number of people over 60 will be larger than the entire U.S. in several decades. The crisis part? China is still a developing country even as it becomes an industrial powerhouse. So the challenge of feeding this number of seniors may be a nightmare. The one-child policy has been going since the late 70s, which would put those unborn kids in their 30s now--prime production years. And the move to capitalist ideals, including rural kids moving to cities to find fortune runs headlong into ideals about honoring and providing for one's elders. Yikes.

At the risk of an overly ridiculous analogy (I'll take ridiculous, but not overly ridiculous), this brings back memories of the era when Japan, Inc. was going to crush the U.S. And along the way, the geopolitical shift was derailed by Japan's banking system, real estate bubble, and more. I'm not dismissing in the slightest the massive impact I expect from the exploding Chinese industrial might, but just noting that a few twists may happen on the way to the party (or should I say "Party").

1 comment:

Anonymous said...

And another thing to consider is the entrepreneurial spirit of societies...this can be a sustainable advantage..

If you just have one child, would you let him do anything risky? Most people won't (and our genetics dictate that we do).

In China, they are making an entire generation of risk-averse people with their one-child policy, and that can negatively effect the societal entrepreneurial spirit - definitely not good for the economy in the long run - especially in a global world.

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