China's Demographics Seem To Keep Worsening
What was something only noticed by a few demographers is now starting to garner global attention.
The demographic situation in China is horrific. It appears the numbers published by the government are completely misleading.
We know they overestimated their population by at least 100 million. This was all in the last 40 years meaning these are the ones of reproductive age. It does not stop there. Some are projecting the number might actually be close to 400 million. That would mean China's population is closer to 1 billion as opposed to the 1.4 billion many claim.
A lot of this stems from the view of what is taking place on the ground.
Here is a video that discusses the situation.
Industries That Cater To Kids
When industries that cater to children start closing, you know there is a problem.
In the video the discussion covers Kindergardens closing down. Some were able to handle 600 students and now gone.
What does it tell you when these are closing. Simply put, there are not enough children in that age bracket to replace those who went before.
Industries are a great way to determine what is taking place. In the United States, we saw Toys R Us close down. This was due, in part, to the Amazon push, taking from physical retail. However, it also was a major part of baby bust the United States has witnessed.
There is also the sale of strollers. Here we have another indicator of who the birth rate is going in spite of government statistics. When the number of sales (or even searches) for strollers drops, it is a sign.
Going back to the video:
"In short, the impact of the low birth rate has arrived."
This is what happens when countries see a decline in their population. Bad things happen throughout the economy. Here we see school closing, a move that will extend to universities at some point along with teachers being laid off. The real estate these schools are on will decline as the use case is no longer applicable.
Catching The U.S.
Many still believe China will catch the United States as the leading economy. We wrote about this in the past as many carried the same opinion about Japan 35 years ago.
The challenge is that economic uncertainty awaits the Chinese. It is very difficult to grow when the population is declining. At the same time, those who are left are aging. This means economic productivity can diminish.
In the era of automation, this is less of an issue. Humans are being replaced with machines so the ability to produce could still be there. The problem is that machines do not consume anything other than energy. Therefore, what is produced has to be consumed outside the nation.
China already has an issue in that it has a low GDP-per-Capita. It is also not a consumption society. The nation is the leading exporter. Here is the other problem: other countries are going to move away from China. This is a combination of geo-politics and technology.
Unlike some, I do not believe China will crash. This is going to be a slow progression over the next few decades. They will lose more each year, starting with the 800K in 2022. Their workforce is going to diminish as the population gets older. We will see the usual fights as the retirement age is likely increased to kick the can a bit further down the road.
Unfortunately, this becomes a circular cycle. We see the lack of children causing economic issues which then compound throughout the economy. This gets magnified if there is a recession which China is presently facing.
Do Not Fall For The Headlines
It is easy to fall for the headlines. We see many who are overlooking this issue.
Just last month we had a bunch of nonsense about the BRICS and what they were doing to take down the US dollar. In reality, they just uttered the same stuff they said in 2010.
That aside, how are the BRICS going to be a force without China? While it is still a major economic power, there are a lot of headwinds, most of which are likely going to lead to decline.
Demographics is something you do not change. We see the FOREX market telling us this as the CNY to USD is sitting near 7.30. At the end of July, it was around 7.11, meaning the CNY went down.
We are in the early stages of this situation. The world is only just waking up to the timebomb China is sitting on. We see real estate blowing up as it was nothing more than a Ponzi scheme. The country overbuilt by anywhere from 60M-100M units. Why did they do that?
The answer to that is for another article.
For the moment, just realize the situation in China is bleak. While the present economic situation can pass, the long term demographics are going to continue to weigh on things.
Posted Using LeoFinance Alpha
China's Increasingly weak demographics will influence much of their economic growth. Most of the goods that they create will have to be exported since there wouldn't be 'enough' people in their country to consume it. It could also be the reason why they're forging partnerships with many developing countries.
There is no way to escape it. We are at the point where many countries demographics are waning. It is going to hit them hard economically.
Chuck Fina.
Hopefully its real estate bubble doesn't cause more harm than ours in 2008.