The People's Republic at 60

There has been a lot of fuss this week about the 60th anniversary of the People's Republic of China. If you watched any of the festivities from Beijing, they included a parade of military hardware much like we used to see from the Soviet Union. That has sparked yet another round of hand-wringing and panicky talk in the Western press about the future of China. Often, this includes a paranoia about China as our "next enemy", a term I have literally had people say to me.

I'm going to throw out my bold prediction here, however, and tell anyone who wants to listen that they don't need to worry about China, or at least not about China as a rising military superpower. I'll preface this by saying that I have no pretensions to great expertise. The only authority I have is that I read a lot (or too much, according to a certain someone in my household), and that I read without ideological prejudices (although I have plenty of them, I only get them after I read, and I make new adjustments all the time).

My first, and most basic point, is that many people don't fully appreciated how vast the gap really is between the Chinese military and the U.S. military. My second point is that China has yet to really demonstrate an aggressive military intention for the future (there are incidents, but very little truly militant or expansionist rhetoric). My third point is that I believe both of those issues, the questions of Chinese military capabilities and intentions, are largely moot. I have my suspicions that those questions are, in the long run, irrelevant.

The real factor that will shape the future is demographics. The size of the population doesn't matter as much as the ratio of ages within the population. China is racing the calendar, and it is losing. The Chinese are getting old faster than they are getting strong, or rich. The Chinese fertility rate is down to less than 1.8, and dropping. The median age is already 34 years old, and rising. The ratio of men to women is 1.2 to 1.

If you don't realize the implications of those numbers, I'll explain. Fertility rate is a measure of babies born per woman in the population. It requires a fertility rate of 2.1 to maintain a population (the ".1" being the extra needed to offset premature deaths in the population). A fertility rate of 4.0 or more will double the population each generation. A fertility rate of 1.0 will halve the population in the same time. China's population growth is virtually zero, and it is very likely to start falling. The rate among the educated, professional classes, the same people that are needed to sustain a vibrant economy, is even lower.

A median age of 34 is itself not especially high, yet. The U.S. median age is 36. The Japanese median age is 44. However, given the low birthrate, this is going to increase very quickly. The imbalanced gender ratio, itself a byproduct of selective abortions created by a cultural desire for boys (reinforced further by the one-child policy, because being allowed only one child, many families opt for boys, and there are ways around the laws prohibiting sex selection through ultrasounds).

The demographic shift has already taken hold. Many Chinese families are already looking at a future in which one worker supports four grandparents. In the case of families with a non-working spouse, that is one worker supporting eight grandparents. This will be a crippling burden for the Chinese. The punishing math would hold even if China had a public pension system, because the underlying ratio of young people to old will be true across society as a whole. This demographic challenge is very unlikely to reverse itself. Once people start having fewer babies, they tend to get used to it. (Side story: When I went into the school to pay fees for my three children to go to school camp, the secretary was aghast "Three children?" she blurted out in amazement, "one is enough!").

Eventually, the cumulative effects of not having those children adds up. The young people just aren't there, and their absence wreaks havoc on all the factors that actually make for a vibrant economy. It is the young who have the energy, confidence, and entrepreneurial zeal to drive a society.

I'm not predicting the imminent collapse of the Chinese economy here. The overall population size, and natural increase among some segments of the population (not all Chinese are bound by, or follow, the one-child policy), will keep China going for a long time. They will face economic challenges in the future, but all societies do for various reasons. But in the end, demographics drives everything; those that have the babies, have the future.

If you want a grand sweeping historical example, then look to the British, who rode the agricultural and industrial revolutions to world empire. People often overemphasize the technological advantages of Britain, but that is only part of the story. The more important part is that Britain was the first nation to conquer chronic food shortages and widespread childhood illnesses, which gave them a huge population surplus. Their many sons manned the Royal Navy, and staffed the thousands of military and administrative posts needed from Africa to India to Australia and beyond. That was the indispensable factor in British hegemony. Like I said, in the long run, those that have the babies win.

Europe, of course, is old news at this point. Literally. The European economy is untenable, with its lavish state welfare programs that cannot last because the workers that would support them simply are not being born, and it is doubtful that the immigrant workers who are by necessity replacing them will willingly support their European elders indefinitely. This should be a warning for those Americans who are so enamored of the European model, but that is a bigger topic than I want to go into right now. As for China, the most relevant current cautionary tale is Japan.

Do any of the rest of you remember the talk about Japan back in the 1980s? We were all told over and over about how the Japanese were on the brink of taking over the world economy. They were going to own everything. In case you haven't noticed, it never happened. The reason is simply that they got old. The Japanese fertility rate is down to 1.2. The median age, as I noted above is already 44. The population will literally halve in the next generation. Given the Japanese antipathy to foreigners and immigration, they are already having a terrible time supplying their own workforce. They are experimenting with incentives to lure ethnic Japanese workers to immigrate back from Brazil, to which thousands of Japanese families moved over the past few generations. It isn't working out so well (they don't act Japanese enough anymore, and there is perhaps no other culture on earth so unable to assimilate "others" as Japan). Never mind that, the young Japanese who are left are like to get sick of living in a geriatric society and emigrate out. There goes all of your economic energy and creativity.

China and Japan are hardly perfect analogies. For one thing, the Chinese population is literally 100 times bigger. But the basic economic challenges are similar, and China doesn't have the advantage of Japanese wealth. There will always be a lot of people in China, but too many of them will be too old. They will still make their mark on the world order, but it will be through diplomatic and economic means. As I said above, I'm predicting economic challenges for China, not economic collapse. China economy should hold strong for a good long while, and as far as their economic power goes, they have enormous leverage over the U.S. because of the trillions of dollars of debt they hold in U.S. Treasury Bonds. That is the sort of power that could be wielded even by a nation populated by little old ladies.

An example of how the Chinese will use their power can be seen right now in Africa and the Middle East, with an instructive situation being the fact that any Western efforts to enforce economic sanctions against Iran for its nuclear program are going to be toothless, because the Chinese and the Russians aren't going to play ball. This is entirely off the subject, but speaking of the Russians, they are already in a demographic death spiral: median age 38 (42 for the half of that actually has the babies), population growth -.5, and fertility rate 1.4. The Russians can cause trouble through international politics, but they won't be reviving the empire anytime soon, no matter how much Vladimir Putin wills it to be so.

So as for the Chinese military, forget about it. They won't even have the young men needed to fill a great military machine. I would imagine that any attempt to actually use that military could provoke total rebellion by the millions of parents who would never accept their only hopes for the future get sent off to war. One can't build an empire with a nation of only children.