Chinese Economics Thread

[Geographer]

Cross-posting from the 052C thread regarding demography.

China over the long term has a huge advantage over the US in that Chinese population is 4 times bigger, meaning bigger middle class, more tax revenues, which means the government can spend big on military without going into big deficits....
Countries with big populations have a MASSIVE advantage, that why the US was the big power since they were the bigger population compared with their rivals at the time. That's why Japan was never a threat to US power considering they have only 1/3 of the US population.

J-XX is absolutely right that population is the key to power. Eventually all developed nations will achieve relatively equal per capita productivity, making the number of people key to total economic and military power. However, China is shooting itself in the head because of the One Child Policy. China's population will peak around 2030 then decline, and as it declines it will rapidly age, just like Japan. China's only hope is to reverse the One Child Policy and encourage large families, or welcome a wave of immigrants (not just guest workers, but immigrants who settle and become Chinese citizens).

By contrast, America's population is steadily increasing, and probably always will because it has a higher fertility rate than most developed nations and has a pro-immigrant culture. India will surpass China in population around 2030, and keep on going for a long time because they do not have leaders so cruel or short-sighted as to impose a One Child Policy on Indian families.

China's demographic structure will look like Japan in a few decades. China's leaders and CCP members need to think long and hard about how to avoid Japan's (and Italy's, Spain's, Greece's, and Portugual's) demographic decline. A nation should strive to be forever young, to always have a population bulge in the 15-30 range, because this is when an economy and society is more dynamic, more innovative, more risk-taking, and more forward-thinking. Societies of elderly (65+) like we see in Japan and Southern Europe is less innovative, less dynamic, and more risk-averse. Young people require fewer social services than the elderly so the government budget can be spent on infrastructure and power projection rather than old-age welfare systems.

I believe China's future citizens will look back at the One Child Policy as one of the great mistakes of the CCP, and possibly one of the worst social policies of all time. They will be begging Chinese parents to have more children, offering large financial incentives for babies, just like Singapore, Hong Kong, France, Sweden, and many other developed nations are.

 

[tphuang]

They really have to start scrapping the one child policy, because it's really no longer needed. China clearly has gotten to the stage where it no longer makes sense for most urban dwellers to have more than 2 kids. CCP is really dropping their ball on this one, if they continue this policy for much longer. Eventually you will continue to see this male/female imbalance and young population that have to support a much larger elderly population. They project that by 2050, China's population will decline to 700 million. That's a huge problem.

 

[Franklin]

The other side of the coin is how do you think China will sustain a higher population growth while issue's like arable land and water is already becoming serious issue's in China. Where are the jobs, the food, the resources going to come from to sustain them ? How do you think that China and the rest of the world can sustain ever growing numbers of human beings demanding ever more resources from the planet ?

 

[Franklin]

The otherside of the coin is how do you think China will sustain a higher population growth while issue's like arable land and water is already becoming serious issue's in China. Where are the jobs, the food, the resources going to come from to sustain them ? How do you think that China and the rest of the world can sustain ever growing numbers of human beings demanding ever more resources from the planet ?

 

[Geographer]

The other side of the coin is how do you think China will sustain a higher population growth while issue's like arable land and water is already becoming serious issue's in China. Where are the jobs, the food, the resources going to come from to sustain them ? How do you think that China and the rest of the world can sustain ever growing numbers of human beings demanding ever more resources from the planet ?

I'm glad you raised this point because it's a common misconception. Food production around the world has been rising non-stop since the beginning of human civilization. Food production in the last century has growth faster than population. Let me say that again: food production has increased faster than population around the world. It is no surprise then that per capita income around the world has also increased more or less non-stop for the last fifty years. The empirical record has directly refuted Thomas Malthus and the other neo-Malthusians like Paul Ehrlich who brainwashed the UN and many governments including India and China.

This was all achieved by improved technology and economic systems that more efficiently allocated resources. Huge increases in per-acre yield and per-capita yield have come from widespread use of fertilizers, modern irrigation systems, pesticides, tractors, crop rotation, and genetically-modified crops.

Where are the resources for future global population growth? Everywhere! World trade has enabled China and India to buy what they cannot produce locally. When you consider how inefficient agriculture is practiced in India, Africa, and Latin America, you realize how much room for growth there is in simply modernizing existing farms and ranches. If global warming opens up vast expanses of Canada and Russia to agriculture, that is another way to provide for population growth.

Where are the jobs going to come from? From a dynamic market economy! A market economy expands and contracts according supply and demand pressures. Labor is a commodity, and if there is a surplus of labor that will push down wages and increase of the number companies willing to hire. I can predict the neo-Malthusians' response: So population growth will depress global wages? In the medium and long-run, absolutely not. The empirical record is very clear that global wages and standards of living have increased around the world simultaneously with rapid population growth.

But what about the Earth running out of resources? This is the last card neo-Malthusians play. The fact is, commodity prices world wide have decreased with adjusted for inflation over the last fifty years. If there was an imminent shortage of commodities, then current prices would be driven sky high by speculators. But other than short spikes due to geopolitical risks, there is not long-term hoarding of commodities.

Let's suppose there is an imminent shortage of commodities. In that case, speculators would hoard commodities and drive the price up. When the price rises, it encourages conservation and exploration. Such was the case for oil in the 1970s. Oil prices rose when Arab producers embargoed oil. Americans responded by purchasing more fuel-efficient cars while oil companies got busy exploring for oil in the North Sea and other places. A commodity shortage would be rectified by market forces.

 

[Geographer]

I started a new thread in the Members' Club Room for discussions on China's demography and the One Child Policy. I hope you all join the discussion!

 

[Franklin]

Geographer

I'm glad you raised this point because it's a common misconception. Food production around the world has been rising non-stop since the beginning of human civilization. Food production in the last century has growth faster than population. Let me say that again: food production has increased faster than population around the world. It is no surprise then that per capita income around the world has also increased more or less non-stop for the last fifty years. The empirical record has directly refuted Thomas Malthus and the other neo-Malthusians like Paul Ehrlich who brainwashed the UN and many governments including India and China.

This was all achieved by improved technology and economic systems that more efficiently allocated resources. Huge increases in per-acre yield and per-capita yield have come from widespread use of fertilizers, modern irrigation systems, pesticides, tractors, crop rotation, and genetically-modified crops.

The problem is that the arable land around the world is not equally distributed. China has about 6% of the world's arable land but 19% of the worlds population. And you can't forget the political element of food if you have a large population that is depended on imported food you become vulnerable politically. Just look at Iraq in 1990 before the invasion of Kuwait the Iraqi's had no concerns about food after the invasion the UN imposed sanctions on Iraq that cut off their food imports and malnutricion sky rocketed that in large part has helped to cause the death of more than 500,000 iraqi's under the UN sanctions regime.

Where are the resources for future global population growth? Everywhere! World trade has enabled China and India to buy what they cannot produce locally. When you consider how inefficient agriculture is practiced in India, Africa, and Latin America, you realize how much room for growth there is in simply modernizing existing farms and ranches. If global warming opens up vast expanses of Canada and Russia to agriculture, that is another way to provide for population growth.

Yes, but global warming will also destroy a lot of the arable land that exist around the world today so there will be no aggregate gain on arable land from global warming. In fact i believe that global warming will lead to a net loss of arable land around the world.

Where are the jobs going to come from? From a dynamic market economy! A market economy expands and contracts according supply and demand pressures. Labor is a commodity, and if there is a surplus of labor that will push down wages and increase of the number companies willing to hire. I can predict the neo-Malthusians' response: So population growth will depress global wages? In the medium and long-run, absolutely not. The empirical record is very clear that global wages and standards of living have increased around the world simultaneously with rapid population growth.

Wages in the developed world has been suppressed in America the income of the average worker has dropped 32% adjusted to inflation from 1980 and in Europe things are not that much better. This is the result of the western economies opening up their economies for competition with what used to be called the third world and today known as the developing countries.

But what about the Earth running out of resources? This is the last card neo-Malthusians play. The fact is, commodity prices world wide have decreased with adjusted for inflation over the last fifty years. If there was an imminent shortage of commodities, then current prices would be driven sky high by speculators. But other than short spikes due to geopolitical risks, there is not long-term hoarding of commodities.

Let's suppose there is an imminent shortage of commodities. In that case, speculators would hoard commodities and drive the price up. When the price rises, it encourages conservation and exploration. Such was the case for oil in the 1970s. Oil prices rose when Arab producers embargoed oil. Americans responded by purchasing more fuel-efficient cars while oil companies got busy exploring for oil in the North Sea and other places. A commodity shortage would be rectified by market forces.

The world only has finite resources we don't have infinite resources on this planet and one day we will run out of them. And no market mechanisme is going to change that. Unless we are going to start mining the moon and beyond.

 

[Geographer]

The problem is that the arable land around the world is not equally distributed. China has about 6% of the world's arable land but 19% of the worlds population. And you can't forget the political element of food if you have a large population that is depended on imported food you become vulnerable politically. Just look at Iraq in 1990 before the invasion of Kuwait Iraqi's have no concerns about food after the invasion there where UN sanctions imposed on Iraq and malnutricion sky rocketed and helps in large part to the deaths of more than 500,000 iraqi's under the UN sanctions regime.

Hong Kong has 0% of the world's arable land and 6 million prosperous people. Singapore has 0% of the world's arable land and 4.5 million prosperous people. How can those city-states be so wealthy and successful with no arable land? They trade for it! Their economies are so productive in other industries like financial services that they can exchange financial services for food from food-exporting countries like Thailand, Vietnam, Brazil, and the United States.

Wages in the developed world has been suppressed in America the income of the average worker has dropped 32% adjusted to inflation from 1980 and in Europe things are not that much better. This is the result of the western economies opening up their economies for competition with what used to be called the third world today known as the developing countries.

I'm skeptical of that statistic, but if true, I would guess that is from decline of blue collar union industries like mining and manufacturing. Ultimately, people of virtually every nationality are better off in 2012 than 1980, and will be in 2022 than 2012, and will be as long as we see population growth and a commitment to market economies. When I say better off, I mean they live longer, have greater access to food, information, and consumer goods. The quality of consumer goods has hugely increased across the board. If you're trying to make an argument that population growth in the United States has lowered the standard of living, and that we'd be better off rolling back the clock to some point in the past, that is an extremely tough argument to win.

Meanwhile, wages and standards of living for people in the developing world have increased a lot.

The world only has finite resources we don't have infinite resources on this planet and one day we will run out of them and no market mechanisme is going to change that. Unless we are going to start mining the moon and beyond.

How many resources are on this planet? Do you have any idea? The mass of the Earth is enormous per capita. I think it's safe to say that this doomsday scenario is way, way in the future, if at all. And if it comes, the laws of supply, demand, and market pricing have a solution just as I described. Before the Earth runs out of resources, resource companies and speculators will increase the price as resources become scare. Scarcity causes higher prices which causes conservation, innovation, and future exploration.

There's an easy way for all the neo-Malthusians who predict ecological doom to put their money where their mouth is: buy futures in commodities. If the Earth really is running out of commodities in the near-future, you can expect the prices to rise. Futures would enable the holder to purchase those commodities at a set, presumably lower, price and make easy profit.

 

[montyp165]

If population grows faster than technology can compensate for it coterminous with changing environmental stresses, that can cause massive disruption to environmental systems and population sustainability before a technologically sustainable balance can be built. This also doesn't take into consideration percentage of productive labor in a population, so it isn't just a simple either/or type of situation.

 

[lostsoul]

Please, Log in or Register to view URLs content!

Read the detailed pdf.