China is very
large by most geographical standards. It is the most populous country on the
planet. It now has arguably the largest single national economy - besides
having an extremely ancient and distinct culture. So, well, it sort of does
matter.
So, you
would think that basic facts about China would be rather well known.
Think
again. Misunderstanding it seems to be one of the most commonplace things on earth.
Everyday journalists, politicians of all hues, academics of every possible kind
of tenure, plus a huge number of self-declared pundits sprouting every kind of improbable
brain colour or texture, brandish unchecked facts and gratuitous theories about
China without having even bothered to check the country's all-important demographics
and having tried to understand what they actually mean.
I was especially
reminded of this yesterday when, looking for something that would fit into my new
treadmill's narrow pulpit, I took out from a dark corner at the bottom of my
shelves a book from 2005, which I had once unwisely bought on the strength of
its enticing title (What Does China Think?)
and of its flip-jacket recommendations (notably Chris Patten's - may he be
cursed for an appropriate number of generations) then soon banished to down there.
It
perfectly exemplified that what most "experts" fail to understand is
that China will be old before it actually gets rich. Because they have not even
heard of basic economic growth theory and, most of the time, do not even know
what a partial derivative is (which makes them unable to understand the concept
of productivity), nor have looked at what spectacularly happened to Japan post-1990 (blue line), or is
now happening to Europe (green) though less to the more adaptable US (brown),
they cannot
conceive that China's technocratic leadership, in front of all that well-grounded
evidence, decided long ago that what really mattered was maximising per capita
GDP in 2022 or whereabouts, when what is usually known as the 'Lewis turning point' is scheduled to occur:
(This last graph is from one of Bei Xu's numerous papers for Natixis on the Chinese economy, all of them greatly recommended).
So, yes, China is in a hurry to get rich and powerful - before declining, as a country's total factor productivity is unambiguously negatively linked to population ageing.
This being a heavily managed economy, where local authorities play the role venture capitalists and institutional investors play in genuine market economies, there are thus probably no worries to be had about Chinese economic growth in the next few years - though the obvious danger is that they try to artificially beef up growth in the run-up to 2022, a bit like what Japan spontaneously did in the run-up to 1990, to disastrous later effects.
As to why today's China - in spite of its huge frustraded hordes of angry nationalist young males created by the single child policies - is so unagressive compared to what Wilhelmine Germany used to be at a comparable economic development stage a hundred years ago, look no further: China could sure enjoy the sound of marching boots today and bask in an orgy of nationalism, but in 20 years' time, it will have to rely mostly on slipper-wearing pensioners for its defense. No enticement to go out, conquer and make enemies there.
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