China's Demographic Achilles' Heel

Фото: pexels.com

«The Thucydides Trap», he said, «is not inevitable».

The term «Thucydides Trap», a reference to the ancient Greek historian’s account of the Peloponnesian War, was coined by political scientist Graham Allison to describe the seemingly unavoidable conflict that arises when an emerging power such as China challenges an established hegemon like the United States.

Allison argued that China will eventually overtake the US as the world’s largest economy, a notion bolstered by Chinese government economists who predict that the country’s GDP will be twice as large as America’s by 2030 and three times as large by 2049. Such forecasts have fueled strategic anxiety among many US politicians and scholars wary of China’s growing economic clout and geopolitical aspirations.

Allison’s thesis seems to have found a receptive audience within Chinese leadership circles. In fact, the Chinese economy’s explosive growth – GDP has skyrocketed from 7% that of the US in 1990 to 76% in 2021 – has evidently convinced policymakers in China and the US that the Thucydides Trap is indeed inevitable.

A Better Biden-Xi Summit?

All eyes are on the upcoming leaders’ meeting of the Asia-Pacific Economic... →

But, to borrow again from ancient Greece, these predictions fail to account for China’s Achilles’ heel: its bleak demographic outlook. An aging population can hinder production, reduce consumption, stifle innovation, undermine public morale, and erode economic vitality. In the 2007 edition of my book Big Country with an Empty Nest, I likened China’s demographic trajectory to a sprinter – quick but lacking stamina. By contrast, both the US and India are marathoners poised to dominate the twenty-first century.

Japan, which I likened to a middle-distance runner, provides a cautionary tale. With a rapidly growing workforce and a young population, Japan’s GDP soared from 8% of America’s in 1960 to 73% by 1995. In 1994, however, its prime-age labor force (15-59) began to decline, and it has since trailed the US by every demographic measure. Japan’s economic growth rate has been lower than America’s since 1992, and its GDP has fallen to a mere 16% that of the US in 2023.

Italy’s experience underscores the danger of ignoring demographic shifts. The country’s prime working-age labor force has been shrinking since 1993, and its population is significantly older than that of the US. Consequently, its GDP has dropped from 20% of America’s in 1992 to 8% this year.

China’s population aged more rapidly than previously predicted, and its fertility rate (births per woman) has been lower than that of the US since 1991 and below those of Japan and Italy since 2021. China’s prime-age labor force began to shrink in 2012, signaling the end of its three-decade run of double-digit GDP growth.

In the decade since then, the gap between the Chinese and US economies continued to narrow, partly owing to China’s massive housing bubble. But by 2031-35, China will lag behind the US in every demographic metric, and its GDP growth rate will likely fall below America’s. Chinese GDP has fallen from 76% of America’s 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 US.

Boiling America's Economy

It is said that if you put a frog in boiling water, it immediately jumps ou... →

America’s demographic advantages have played a crucial role in maintaining its global dominance. Its post-World War II baby boom, for example, exceeded Europe’s. Moreover, the US experienced a second baby boom from the late 1970s to the mid-2000s, as its fertility rate increased from 1.74 in 1976 to 2.1 in 1990 and remaining stable until 2007.

Over the same period, the European Union’s fertility rate fell from 2.06 to 1.52. By 2008, the median age in the EU was four years higher than in the US. Moreover, while the EU’s prime-age labor force began to decline in 2008, America’s workforce is expected to remain steady until 2048. Unsurprisingly, EU GDP, which was 1.1 times that of the US in 2008, has fallen to 68% of the US level in 2023.

But the US has its own reasons for concern. America’s fertility rate fell from 2.12 in 2007 to 1.67 in 2022 and is expected to decline further as more women delay marriage and childbirth and as male labor-force participation declines.

Moreover, the US often struggles to address demographic challenges effectively. Despite spending more on health care than any other country, it has the shortest life expectancy in the developed world. Alarmingly, one in 25 American five-year-olds today 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.

Both China and the US 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’s demographic trap could precipitate a civilizational collapse.

Meanwhile, the US 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.

© Project Syndicate 1995-2023 

Возвращайтесь к нам через 4 недели, к публикации готовится материал «Как сеть клиник «Diaverum Казахстан» за восемь лет выросла в шесть раз »