When they have nothing else to talk about, analysts and strategists can always find a market of people keen to hear how China is poised to dominate the globe. But scratch the surface, and you’ll notice that the seeds to China’s decline are already deeply sown.
China is facing a labour shortage. No, you didn’t mis-read that. The country synonymous with teeming millions are running out of workers. From here on out, fewer new workers enter the labour pool (one-third less sixteen- to twenty-four-year-olds over the next ten years), while many more elders exit it.
That dual dynamic will not only age China more rapidly than any nation in human history — by 2050 China will have more old people than America will have people — it will dramatically drive up the price of its factory labour in coming years. This matters when the fulcrum of your economy is an abundance of low cost labour.
As a result, China is forced to move up the production chain as rapidly as possible to generate the higher wages increasingly demanded by hard-pressed workers facing the “4-2-1 problem” — four grandparents and two parents expecting their sole offspring to provide in their old age.
To make matters worse, China has a woefully inadequate support mechanism. In the coming years, resources will need to be diverted from infrastructure and defence modernisation, and into social safety nets.
China’s headlong rush to industrialise was pursued with the most Marxist of prejudices — bending nature to man’s will. That’s a big ask for one fifth of humanity, having previously subsisted on 7 percent of the world’s freshwater supply. It gets a lot harder when growing affluence causes rising appetites for meat and dairy. The country is now one of the biggest dairy producers and importers in the world, and given its precipitously dropping water table, expect China’s addiction to foreign milk to spike in coming years.
What water China does not already consume it goes out of its way to despoil, leaving its still-growing population with a per-capita water supply that’s one-quarter the global norm. Most of China’s biggest cities already face significant water shortages, and the majority of the country’s surface water is considered too dirty for consumption and, in some cases, even industrial use. Upwards of seven hundred million Chinese consume polluted water every day, setting in motion a long-term public-health disaster of unimaginable proportions.
Officially, China admits that pollution costs the economy about 3 to 4 percent of its annual GDP, but Western observers say it’s more like 10 percent. Ponder that next time you complain about hard water in London…
Not only has China recently surpassed the U. S. as the world’s biggest CO2 emitter, in 2010 China snuck past America as the world’s biggest energy consumer, too. China is experiencing a skyrocketing resource dependence on the most unstable regions in the world.
If America is addicted to foreign money to finance its debt leviathan, then China is addicted to foreign supplies of just about every commodity known to man — save highly polluting coal. Even China’s rare recent bright spot, the confirmation of vast gas shale deposits, comes with a particularly inappropriate price tag: a water-intensive rock-fragmenting process (see above).
Around 2030, China is expected to surpass the United States as the world’s biggest importer of oil. Already China is more narrowly dependent on Middle Eastern oil than the United States, for whom the Persian Gulf is the fifth most important supplier. East Asia already draws the lion’s share of Middle Eastern exports, a percentage that will only grow with time as India and China — increasingly fierce economic competitors, mind you — account for roughly half the future global growth in energy demand.
China’s dependency extends even to food, and will only grow as global warming’s impact is made increasingly clear by extended droughts across China’s southern agricultural lands. Note China’s strategic rush to buy up or lease farmland across South America and Africa in recent years, and recently a vast swath of Ukraine. Considering that China was among the first nations to slap restrictions on food exports when global agricultural prices spiked at the end of 2007, you have to wonder how much stock Beijing puts in such paper agreements. Chinese policy makers will need to adopt more and more American/interventionist traits when their interests are threatened. Before long it could be Chinese marines being sent in when the food riots begin … or when the insurgents reach the copper mine … or when the terrorists start bombing their oil rigs.
For us, this is a good thing. As China becomes dependent on the outside world, it has a greater stake in peace and stability. It’s more likely to play by (and help enforce) the rules and recognised norms.
China will grow, but growth is painful, and paranoid hysteria over a looming Chinese imperium are neither accurate nor helpful. China’s Century, it seems, will be very, very short.