China’s economy is described as a “time bomb” as the country faces a growing demographic crisis, an expert said.
Matthew Henderson, an associate fellow at the Geostrategy Council, said the “stark realities” of an aging population and high youth unemployment rates had left Chinese citizens unaffected and passively resistant.
Henderson pointed to the impact of the notorious one-child policy on China’s prospects, where “negative incentives” and “coercive force” have been used to reduce the country’s birth rate for more than three decades.
One effect of the policy is the huge gender gap in China, where “there are now 110 males for every 100 females, which amounts to about 34 million plus males,” he said in an article for The Telegraph.
Diplomatic tensions over the South China Sea have led to China’s first-ever foreign investment deficit
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Such a gap, and other demographic concerns, leave China with a mountain to climb to secure its long-term economic prospects.
“It is not a full-blown crisis, at least not yet,” Paul Krugman said in the New York Times, “but there is reason to believe that China is entering an era of stagnation and disillusionment.”
Reuters said that surveys show that Generation Z in China is the most pessimistic among all age groups, as the unemployment rate among Chinese youth has reached 14.9 percent.
Foreign interest in China has also slowed, with diplomatic tensions rising with the West over Taiwan, Ukraine and the South China Sea – leading to China’s first-ever foreign investment deficit.
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Despite China’s economic gloom, Chinese President Xi Jinping is optimistic
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But Krugman advised caution when he “celebrates China’s economic faltering, which could turn out to be everyone’s problem.”
He suggested that China may look to “divert attention from internal difficulties by engaging in military adventures.”
“Systemic problems have over the years become a hallmark of China’s $19 trillion economy,” said George Magnus, research associate at the China Center at Oxford University.
Magnus pointed to widespread debt problems in China, particularly in housing – “The property market has turned around after an almost 20-year continuous boom, which was encouraged by the government itself,” he said.
He issued a warning that China could face years of stagnation despite its status as a “global export hub” and succumb to Japanese-style “lost decades.”
Despite the gloom, Chinese President Xi Jinping is optimistic, Henderson said, citing the Premier’s New Year’s message.
In his speech, Xi claimed that the Chinese economy “maintained the recovery momentum” from Covid and China And Taiwan should share in “the glory of the rejuvenation of the Chinese nation” – something Henderson called a “fantasy.”
“Instead of the glorious renewal that Xi Jinping vaunts, there is a massive demographic time bomb in China ticking,” Henderson continued.