Senior Scientist at the University of Wisconsin-Madison, Yi Fuxian makes the case that China’s nominal GDP will peak at 84% of the US GDP in 2033. He is the author of Big Country with an Empty Nest and claims that China’s aging population will not be able or willing to innovate.
Nextbigfuture disagrees and believes that the will of China’s leadership and population to adopt innovation and to make whatever changes are needed to cities and business will not diminish. I do not see how the aging of the next few years affects China’s urbanization and the economic boost that will come from integrating into megacity regions. There is a related Nextbigfuture article about the ongoing process of integrating cities into megacities.
China’s median age is forecast to increase to 47 by 2033 and 56 in 2050. In the US, the median age will be 41 in 2033 and 44 in 2050.
Nextbigfuture sees this aging population prediction playing out mainly over the next ten years. Will China’s population that is heads to an average of six years older than the US have one percent per year slower catch up by 2030? I do not think there is a 1% per year innovation adoption difference with a population aging to 47 in 2033 versus one going to 41 in 2033.
China ended 2018 with 90.03 trillion yuan in GDP. The end of 2018 exchange rate was 6.8755 yuan to 1 US dollar but is now 6.7 yuan to 1 US dollar. China probably had 1 to 1.5% GDP growth in the first quarter. This means China has a GDP of $13.5 trillion and it is $14 trillion including Hong Kong and Macau. US GDP is at $21.0 at the end of the first quarter of 2019. China is at 66% of the US economy now. Pre-trade war China’s currency was at 6.3 to the US dollar. If China’s currency heads back to that level after a trade deal then China (with HK and Macau) could be ending 2019 with about $16 trillion in GDP and the US with about $22 trillion.
China Has the Will to Totally Change to Get Economic Growth
China’s leadership and society is willing to do more things to achieve faster economic growth. China is willing and funding the integration of large cities into megacity regions. This is providing an extra 10-25% of GDP per capita boost. The US has this advantage over Europe. The US has been willing to do more than Europe to tear apart the old to make way for the new. China is willing to do more than the US to make way for the new and more productive.
Nextbigfuture believes effective antiaging technology will be emerging over the next few years. Even moderately effective antiaging will make people in the 65-80 year range much healthier and more productive. Japan, China, Europe and other aging populations will see a massive economic benefit from
Yi Fuxian Makes the Aging China Case
In 2010, China replaced Japan as the world’s second-largest economy. Many economists believe China will surpass the US as the largest economy before 2030.
The nominal per capita gross domestic product of China was just a sixth of America’s in 2018 – a level similar to Japan in 1960, Taiwan in 1978 and South Korea in 1986. Japan, Taiwan and South Korea achieved annual growth rates of between 7 percent and 8 percent in over the two decades catching up from the one-sixth per capita GDP. Economists including Justin Lin Yifu, the former World Bank chief economist, have argued that China would go through a similar trajectory and the nation would be able to achieve a 6 percent annual growth rate from now until the 2030s.
The younger an economy’s population structure, the stronger its vitality for economic innovation. As the median age rises and the proportion of the population aged 65 and over increases then Yi is expecting China’s economic growth rate might plummet.