China: Economics, Demographics and Politics

Is China an economic tiger or a pussycat doomed by its demographics and politics? Given enough cavemen, it is possible caveman GDP could surpass that of the USA.
China: Economics, Demographics and Politics
By: George Noga – April 29, 2018

      To hijack popular parlance, we are pivoting to China. This post presents MLLG’s inimitable perspective about China’s economy, demography and politics and it isn’t what you read in the popular media. Upcoming posts will address the Trump tariffs, China’s balance of trade with the US and whether or not the yuan is undervalued.

       Americans have been swamped with hype about China’s economy overtaking ours. Let’s look at the numbers. US GDP is $19.8 trillion or $61,700 per capita, 5.5 times the world average, 8th best in the world and highest of any major nation. China’s GDP is $12 trillion or $9,400 per capita, 17% below the world average and 74th in the world behind Mexico and Equatorial Guinea and similar to Botswana and Gabon. Also remember that China’s reported economic data are widely regarded with skepticism.

       China’s economy is 61% of ours but, as the hype goes, they soon will blow by us. Let’s test this assertion. Assume the US economy grows at 2.3%, a full percentage point below its historic average. Further assume China’s GDP grows at 4% until 2030 and then 3% thereafter. Under that scenario, China would require 55 years to pass the US in nominal GDP. Even then, its GDP per capita would be only 25%-30% that of America’s. If there were a trillion cavemen, each producing $20 a year, caveman GDP of $20 trillion would surpass America’s; however, they still would be living in caves!

       Another reason China won’t overtake the USA is demographics. Gender selection due to China’s one-child policy resulted in 140 million more men than women. Their 1.16 fertility rate is lowest in the world and will decimate the population in the next generation. The shortage of women creates social and political unrest. China’s ageing demographic already has resulted in a shortage of workers and an army of the elderly.

      Politics is another source of China’s woes. All empires throughout human history have broken up. China is an empire; therefore, it too will break apart. China doesn’t even have a common language; Cantonese and Mandarin are as different as Portuguese and German; people from different parts of China use broken English to communicate. Over 150 million people in China are not Chinese; there is Tibet, Manchuria, Inner Mongolia and the Uighurs. There is a significant and growing Muslim population in China’s outer western provinces, which is ruthlessly suppressed. Communists still govern with an iron fist; the internet is censored; and there is no political freedom.

     China is not nearly as formidable economically as the chattering classes and the mainstream media would have you believe. Its GDP will never catch the US and some time, in the not too distant future, it will begin to lose ground. Its demographic imbalance is a ticking time bomb and inevitably will result in chaos and social unrest. China will be the only country in history to grow old before it grows rich. Communism won’t survive as economic freedom inevitably leads to political freedom.

     China will experience increasing entropy economically, demographically, politically and socially. Its decline is ineluctable. America is a great nation because its people chose to be part of it. China is an empire of unwilling people of different ethnicities and languages held together by brute force. As a consequence, the Chinese empire, like all others throughout the history of mankind, will shatter amidst ethnic strife.


Our next post continues our pivot to China as we address the Trump tariffs.