I had previously said that China’s purchasing power parity GDP was likely 30% higher than official numbers. However, purchasing power parity strength does not mean the country would or should do better with a stronger currency. The country has to import 10 million barrels per day in oil.
The previous article notes the exchange rate weakness in China. The RMB got weaker. This dropped China from $18 trillion to 16.5 trillion in GDP. It also noted that Italy and Japan are dropping in the GDP ranking.
Yes, purchasing power parity wise, China’s citizens have far more ability to buy things than officially reported. So the exchange rate could go up and China economy could still be good. However, exchange rate GDP and exchange arate are separate and more complicated things. A nations ability to buy imports like buying oil etc… Soviet Union collapse was not able to pay cash to UK for grain. Having hidden purchasing power parity economic strength now or ten years ago is irrelevent to a collapse taking out economic strength. This collapse being the population aging out and losing productivity. The after-effects of the one-child-policy means accelerated age out and drop in productivity of older workers. ten years ago everyone productive with an average age of 34, now things are at 38.7 but is going to 47 by 2040 and then 55 by 2070. Working age population shrinking 1% per year.
So they were and are stronger than they claimed but the fall could be harder and sharper. The declining countries Japan, China, Italy are the older population countries with shrinking populations. More old people in general and really old people dying. I can be very strong when I am 38 but I am less productive 55 and I am retired or very unproductive 65-70 and maybe I am dead 75-90. And I am close to useless (for economic work, having a job etc…) 5-10 years before dying in most cases.
Antiaging and aging reversal could forestall this or reverse but as of now and for the next 20 years there is no tech miracle to prevent this decline in overall productivity.
I have said for over fifteen years that China needed to pivot hard on the one child policy. They have pivoted to a kind of three child policy. However, they needed to do more giving free test tube baby (IVR) services to the 33-45 year old women who want kids but were denied under the old policy. They also need to give free daycare and education support. The policy pivot was too slow and too weak and the delay means that too many women are 40+ and beyond good odds for IVR. They needed to go over ten years ago to unlimited kids and here have money and medical to have more kids or maybe using that Commie power to force more kids.
This did not happen. Shattering my hope that they could be remotely competent. I understand why they did not do it. They did not want to admit they were wrong and all of the dynamics within the bureaucracy. They also do not trust the rural people and some ethnicities. They did not want the “wrong people” having more kids. The “right people” were too busy with the white collar lifestyle or making rational choices about forming and raising a family in the urban and social situation that exists.
China could drop below 800 million people in 2100, almost half the current population. Japan and Italy are also staring at that kind of halving.
If the leaders, government did not and do not go full bore to mitigate this then they will have a halving of the GDP or more. Half the people with the same producitivity as now per person. But if those who remain have less productivity then GDP falls more than half.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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