China is being hyped around the world as a great success; but, the hidden truth is there are several big issues facing this nation in the near-term future [see photo]. One issue is that the problems ahead are the direct result of decisions made in the recent past. The one child policy disrupted the core strength of life in China - that is the family. The push for Economic Growth with a clear focus on exports lead to the rise, and rise, of a new wealthy class. And the notion that China could simultaneously run top-down social controls meshed neatly with the bottom-up free market innovation lead to a sharp discord between the haves and havenots in cities, towns, villages, and farmlands.
The way forward for China 2021 could be determined by three big issues.
First the demographic makeup of China 2021 is one of a rapidly ageing population. Tradition says that old folk are cared for by their offspring. However the crop of offspring for this ageing generation is a scarce resource. The fact is that young people are not reproducing in the numbers that can influence the ageing demographics trend in the near term. Thus the CCP is striving to invent "family friendly" public policy settings that will encourage young couples to have two, three, four, or more kids. But these policy initiative meet solid resistance from the mindset of young couples who note that having, and raising, children is substantial economic burden given the cost of accommodation, education, etc. Recently the CCP shutdown companies who were set up to teach English as a second language. In part, the logic behind this move is that young people are spending money on language training rather than on raising kids. Indeed the tutoring costs of kids learning English was becoming a substantial impost on family budgets. Overall the internal dynamics of the demographic profile for China has become a major concern for the CCP.
Second the focus on economic growth through exports, national infrastructure projects, and real estate speculation in the Provinces has run its course. Exports are being hit by rising shipping costs and delays [Covid related] in the supply chain. National infrastructure projects are funded primarily by CCP who see the need to upgrade the systems that move people and goods within the economic growth corridors of the nation. Real estate spending in the Provinces [flushed with funds from the Central Government] has led to the appearance of ghost cities. Building upon building has risen in spaces that once supported small farms and other low-productivity activities. These buildings are degrading while serving no useful purpose other than making some speculators rich as they buy and sell these units much like shares on a rising stock market. At present it seems as if each and every element of the CCP economic growth programme faces strong headwinds.
Third the focus on the ideology of "common prosperity" will see workers in China come under greater and greater control by the State throughout China wherever market forces are booming aright now. The current ideological dream is for China to become a global superpower; but, this must happen before an ageing population turn-offs the spigots of economic dominance and global power. Decoupling from the American economy will likely dethrone the likes of Alibaba, TikTok, etc and, in turn, this will constrain the tax base that the CCP relies upon to fund its massive public sector programmes. The underlying issue here is the productivity of labour. And in this regard the CCP faces a social movement [laying flat] which may lead to many young workers refusing to get a job because they do not believe that hard work will lead them to home ownership and a middle class lifestyle. While this movement is still a bug not a feature of life in China it is nonetheless a sign that ideological purity is not necessarily a cure for the social and economic ills of this modernising society.
Richard.
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