28 June 2011

Japan and China Look Old Age in the Eye

Japan's relatively stable stagnation will continue for another 5-10 years before the combination of bad demographics and excessive debt causes the country to collapse into a crisis from which it may never recover. Its long history of domestic consensus and tranquility notwithstanding, Japan may well become a failed state. _Benzinga

The Land of the Setting Sun
Japan's fertility rate has been below replacement levels for over 30 years. Japan is aging very quickly. Once a population ages to the point that a relatively few fertile females remain, the point of no return for that population may have passed.
Fewer people means fewer customers to sell to. It means fewer innovators pushing at the boundaries of current technology. And in the modern welfare state, it means fewer people to pay for the pensions and health care needs of the elderly.

Regrettably, John Maynard Keynes was right. Without a continually growing population, the capitalist economic system starts to fall apart.

Of course, Japan's demographic woes are not just about shrinkage. It actually gets worse. Populations are not just a number; the composition of the population matters too. Japan's is changing, growing older at an alarming rate... _Benzinga


As you can see, sometime after 1975, Japan's total fertility rate dropped below replacement. Too many things would have to change in today's Japanese culture for that trend to reverse itself meaningfully. As Japan's population declines, Japanese industry will have to rely more and more upon export markets, which will put it in direct competition with a soon-to-be-aging China.
Japan’s population of 128 million now accounts for 2% of the world population, but with the global population on the rise the ratio is expected to reach 1% around the year 2050, according to another government survey. This has an array of implications, including forcing Japanese companies—from food makers to insurance companies—to go outside Japan to seek a bigger slice of the market share through mergers and acquisitions. _WSJ

With it's "one-child policy", China's fertility is similar to that of Japan. Although China's population is still growing as a result of sheer momentum, the nation's people are aging rapidly, with all the dire economic consequences that Japan is already beginning to experience.
China has reached a turning point. Demographic conditions are becoming unfavorable as the "baby bust" generation comes of age - entering and progressing through the working ages.

Currently, the "baby bust" is pushing down the number of people in their early 20s. In another 10 years, the number of people in the 20s and early 30s will be in decline. With each passing year, a larger share of the labor force, too, will be in decline.

The aging population is growing and will continue to grow very rapidly. The speed of aging will depend primarily on whether the fertility rate recovers from its currently low level or declines further as has been the case in South Korea and Japan. If China's total fertility rate begins to recover from its current level of about 1.5 to 1.6 births per woman, about 34 percent of its population will be 60 years or older in 2050. But if the total fertility rate declines to lower levels, about 39 percent of its population will be 60 years or older by then.

...The speed of aging will depend primarily on whether the fertility rate recovers from its currently low level or declines further as has been the case in South Korea and Japan. If China's total fertility rate begins to recover from its current level of about 1.5 to 1.6 births per woman, about 34 percent of its population will be 60 years or older in 2050. But if the total fertility rate declines to lower levels, about 39 percent of its population will be 60 years or older by then. _Xinhuanet

Japan was already rich when its people began growing old. Unfortunately, the bulk of China's vast population -- already beginning to age -- is still quite poor. Even worse, with China's one-child policy, individual Chinese tend to have no brothers, sisters, cousins, aunts, or uncles. The potential for alienation without family is quite severe. And with a growing imbalance of males to females in the population, family life in China is apt to grow somewhat more rare. What will all these excess males -- no relation to each other -- do with all their spare time?
Across both the province and China as a whole, the disaffected are lashing out. “There is a growing sense of a country in danger of pulling itself apart at the seams,” as Hong Kong journalist Will Clem put it yesterday. Poor migrants in Guangdong have yet to start a full-scale insurrection and it’s too early to speak of “blood laptops” and “conflict handbags,” but these days they are in the mood to fight. _Forbes_Gordon_Chang

China's government is likely to turn to nationalistic saber-rattling and border wars, if for no other reason than to secure natural resources and to give the population a reason to rally around the flag. Excess young men, of course, can be given uniforms, and something to do.

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7 Comments:

Blogger kurt9 said...

China's government is likely to turn to nationalistic saber-rattling and border wars, if for no other reason than to secure natural resources and to give the population a reason to rally around the flag.

Countries with aging populations do not go to war.

Tuesday, 28 June, 2011  
Blogger al fin said...

In 30 or 40 years, what you say may well apply to China. But it takes time to age a massive population, and in the meantime....

Think about it, Kurt. China has 1.3 billion people and somewhere between 30 and 50 million excess young males. That process of unbalancing the gender groups -- selective abortions -- is unlikely to stop anytime soon regardless of shifts in the mean age of the population.

If push comes to shove and the population of China threatens to grow unruly and unrulable, all of those excess (and potentially dangerous to the regime) young men could make a lot of cannon fodder.

The concept of "an aging population" is somewhat more abstract than the reality of tens of millions of disposable young men.

Tuesday, 28 June, 2011  
Blogger Benjamin Cole said...

America: Let in more of those Mexicans. They are fertile, and work hard.

Tuesday, 28 June, 2011  
Blogger al fin said...

Benjamin: Mexicans are a diverse population, and generalisations about their character and level of ambition should always be qualified.

Leaders of the US Democratic part want to let a lot of Mexicans into the US, feeling that Mexicans are more likely to become dependent upon big government, and thus to vote for Democratic Party candidates. Their point of view is of course blatant stereotyping and somewhat racist, but then they are the big crony, big labour, big government party, after all. People are just statistics to them.

Most average Americans would probably prefer much better border security along the US / Mexican border.

Tuesday, 28 June, 2011  
Blogger kurt9 said...

That process of unbalancing the gender groups -- selective abortions -- is unlikely to stop anytime soon regardless of shifts in the mean age of the population.

It already is changing. Japan and South Korea already went through this. East Coast city people already prefer girls to boys now.

If push comes to shove and the population of China threatens to grow unruly and unrulable, all of those excess (and potentially dangerous to the regime) young men could make a lot of cannon fodder.

I doubt it. Most kids in China are "only childs". Only-childs tend to make poor soldiers. Sure, there is rioting and protests in China. But its no worse than what Taiwan and South Korea experienced in the late 80's to early 90's.

Historically, China has never been expansionist. Indeed, they have been quite inward-oriented through out much of this history. I see no reason for this to suddenly change in the near future.

Tuesday, 28 June, 2011  
Blogger Benjamin Cole said...

Al fin-

Maybe so, but w/o the Mexicans, we do a Japan. Replacement rates fall in every advanced nation.

Just be glad we can bring in Catholics, and not Muslims, ala Europe.

I would favor much more liberal immigration quotas for people from SE Asia.

And, of course, any pretty girl in the world should have a US passport for the asking.

Tuesday, 28 June, 2011  
Blogger al fin said...

Kurt: Countries, like people, are apt to change behaviours as circumstances change.

Japan was not traditionally an expansionist state, until suddenly it was. Japan had a healthy youth bulge going in the 1930s. Energy was high, as was nationalistic fervour. Things are much different in Japan now.

Before Napoleon, France was not especially expansionist. Before Hitler, Germany was not remarkably expansionist. Was Russia expansionist before it grabbed Siberia, and then Eastern Europe? Not so much.

China means to expand. The only questions are where, when, and how. The why is in the character of the leadership class, which sees China's chance coming soon.

China only lacks its Hitler or its Napoleon. But not in a strictly military sense. The Chinese would like to control things without having to fight a war over them. The threat of military power is necessary, even if it isn't actually used.

Benjamin: Have you checked who really controls the Mexican countryside? Not the Mexican government. It's a bloody crime-fest and it is headed north.

Tuesday, 28 June, 2011  

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