Reality of China’s economic situation
It’s time someone told the truth to you, so I should probably say it. Things are going to get chaotic. The same kind of economic turmoil that rattled the world in 2008 is likely going to strike again. Now, this could be because of any number of factors, but let me point to one particularly seismic factor in this upcoming economic meltdown: China. More specifically, there are three key factors that will play a deciding hand in China’s economic fortunes: economic decline, population woes and the Panama Papers.
The first of these factors has been noticed for a while now. In fact, earlier this year, there was a brief panic over China’s economic performance. An article from January in the “New York Times” stated that “The Chinese economy grew at a 6.8 percent rate in the fourth quarter, according to data released on Tuesday. It was the lowest quarterly expansion since the global financial crisis in 2009.” Also, an article in the “Financial Times” cited different banks and their predictions of how much China’s growth will contract, though their predictions still remain over six percent of growth. Still, we saw some of the effects of China’s performance earlier this year when the Dow Jones (which you can find on websites like MarketWatch) dropped to the mid-15,000s, China having some influence on that. Should China continue to perform relatively weakly in succeeding years, who’s not to say that they’ll set off a chain reaction of bad economic news?
Oh, but we’re just getting started. China’s demographics and population are also bound to hit a wall soon. An article from 2012 by BBC includes an interactive graph that shows how much of China’s population will be 65 and older, using statistics from 2010 by the United Nations, Department of Economic and Social Affairs, Population Division. The numbers are startling. China’s population aged 65 and older will surpass 25% by 2050, hitting peaks of 30% for both 2070 and 2080. However, that’s not the only worrying factor. An article from 2013 by “GlobalPost” that factors including China’s now-defunct one-child policy has left the gender gap artificially high: “Social scientists in China say the upcoming census results could reveal a gender ratio of 122 boys born for every 100 girls. Under natural conditions, there are typically 105-106 boys for every 100 girls.” With that many men with that few women, combined with an aging population, and things don’t look too good for China’s economic outlook.
Now, one factor that could be a positive is what’s known as China’s “ghost cities.” An NPR article from last year interviewed Haishan Wu from the tech company Baidu about these ghost cities. The data revealed that “Many of these deserted developments have apartment buildings and not much else.” Wu also added that his “hunch is that people don’t want to move into neighborhoods that lack schools, hospitals and shopping malls.” While additional interviewees such as University of Chicago political scientist Dali Yang and Kenneth Rhee of the nonprofit Urban Land Institute have some optimistic outlooks regarding these ghost cities, the fact that people aren’t living in these cities right now doesn’t bode well for a country that’s experiencing economic contraction.
Then, just recently, the Panama Papers got released. The implications in those papers regarding the Chinese government are pretty undeniable. An article in the “New York Times” earlier this month noted that “At least three of the seven people on the Chinese Communist Party’s most powerful committee, including President Xi Jinping, have relatives who controlled secretive offshore companies, the organization that has publicized a trove of leaked documents about hidden wealth reported on Wednesday.” Of course, if you’re living in China, you wouldn’t know about it: Both the NYT article and an article from “The Guardian” earlier this month note the crackdown that’s happening regarding the Panama Papers. Sooner or later, however, when things turn bad for China, there are bound to be people questioning what’s going on. Whether or not China’s leaders have solutions to these problems will determine China’s future.
Criminally, not enough talk is being passed around about China’s economic outlook. It would be so refreshing if this president had an honest discussion about China and how it will impact the US and global economies. Depressingly, though, looking at this election, who wants to hear that? So, keep your eyes and ears peeled: you can expect to hear more about China in the near future.