One of the reasons for the deterioration of US-China relations is the exaggerated forecasts of China’s economy. Government economists such as Justin Yifu Lin and David Daokui Li have predicted that China’s per capita GDP will be half or even 70 per cent of the US’, while its overall GDP will be twice or even triple that of its rival by 2050.

The Chinese authorities are pleased with these forecasts and are pursuing strategic expansion accordingly. Other countries, such as the US, have also been misled by these forecasts, mistaking an old, sick cat for an aggressive lion.

For example, Michael Pillsbury, the leading authority on China according to former US president Donald Trump, believes the size of China’s economy will be triple that of the US by 2049 and that China will turn the US into a colony.

In fact, China’s population is already shrinking and it cannot afford an expansive government. If China is fortunate enough to stabilise its total fertility rate at 1.2, its population in 2050 will be 2.9 times larger than the US’ instead of the 4 times predicted by Lin.

Doctors do not diagnose someone as dying of old age, but of cancer, heart disease, and so on. However, the elderly are more likely to develop these diseases. Similarly, there are many direct causes for the economic slowdown in Japan and some European countries, but the underlying cause is an ageing population.

Japan, Italy, Portugal, Greece and Germany are among those facing the most severe ageing. In 1995, Japan’s per capita GDP was 1.5 times higher than that of the US’, but it was only 62 per cent of the US’ level in 2019. The per capita GDP of Italy, Portugal, Greece and Germany was 84, 51, 66 and 94 per cent of the US’ in 2008 respectively, and dropped to 51, 36, 30 and 71 per cent in 2019.

China faces demographic challenge as birth rate drops despite government efforts

China’s total fertility rate – the average number of children a woman would have if she survives her childbearing years – has been lower than that of the US since 1991 and that of the five countries mentioned above since 2000, meaning China faces more severe ageing problems.
By around 2035, China will be worse than the US in all demographic parameters and its economic growth rate will probably start to be lower than that of the US.

China’s per capita GDP will hardly reach 30 per cent of the US’. Its GDP is unlikely to surpass that of the US unless there is another black swan event like the Covid-19 pandemic.
Another reason for the strained US-China relationship is the lack of mutual political trust. Some Western politicians expect China to replicate the political trajectory of Taiwan and South Korea, while Chinese authorities have been tightening censorship for the sake of regime security. However, the illusions of Western politicians could be dashed because of the dramatic demographic changes in China.

The youth population, aged 15-29, is the most economically dynamic and politically passionate group. The proportion of young people in Taiwan and South Korea rose from 24 and 25 per cent in 1965 to a peak of 31 per cent in the early 1980s. Both economies experienced high growth, saw a surge in democratic enthusiasm and became democracies in 1987, with a median age of 26.

The proportion of youth in China rose from 24 per cent in 1966 to a peak of 31 per cent in 1990 with a median age of 25. Rising political enthusiasm contributed to the Cultural Revolution, “reform and opening up” and the 1989 Tiananmen incident. However, the proportion has dropped to 17 per cent in 2021 while the median age has increased to 42, and the enthusiasm for democracy is diminishing.

The youngest city, Shenzhen, still has economic vitality and popular enthusiasm while the most aged region, northeast China, lacks economic vitality and strongly supports the government. Many Chinese people are accepting of harsh coronavirus controls and will count on a powerful government to provide social security and health care in the future.

However, an ageing population, fewer young people and overly strict censorship all make society and the economy less dynamic. Chinese authorities should feel politically secure enough to relax the censorship system to boost socio-economic vitality.

The US is also facing a serious ageing problem, although nowhere near as severe as China. The median age has increased from 30 in 1980 to 38 in 2018 and will hit 44 by 2050. The proportion of people older than 65 has increased from 12 per cent in 1980 to 17 per cent in 2021, and will rise to 24 per cent in 2050. In 2010, the US had 4.6 workers aged 20-64 supporting one senior citizen aged 65 or above, but the ratio will be only 2.6 in 2035.

The total fertility rate in the US has dropped from 2.12 in 2007 to 1.65 in 2020. Because more people are delaying marriage and having children, the marriage rate and labour participation rate will fall and it will be difficult for the US to stabilise its fertility rate at 1.5. This means ageing will become increasingly severe, economic vitality will decline and health expenditure, social security spending and government debt will rapidly increase.

Both China and the US have entered an economic menopause or andropause, quarrelling endlessly but with no physical strength to fight. Strategic misjudgment based on incorrect demographic data is costly and dangerous.

As Mencius said, “in poverty, take care of yourself; when prosperous, contribute to the well-being of all”. Both China and the US need to carry out strategic contractions. The furious battle between an aggressive lion and a dynamic tiger, planned by the hawks of both countries, will eventually turn out to be just a frolic between a sick cat and a skinny dog.

What we need to worry about is not that China will replace the US as a superpower, but rather that both the US and China will shirk their responsibilities to maintain the global order while the world desperately needs cooperation.

Yi Fuxian is a senior scientist at the University of Wisconsin-Madison and author of Big Country with an Empty Nest, a book about China’s population policies.

Illustration by: Craig Stephens

Source: https://www.scmp.com/comment/opinion/article/3122898/us-china-relations-squabble-between-ageing-superpowers-not-what