1/6
Another very good Frank Tang article. There is a lot of confusion about the systemic impact of aging on the rebalancing of the Chinese economy. The article cites Cai Fang as worrying that “China’s population could peak before 2025,” and that...
scmp.com/economy/china-…
Another very good Frank Tang article. There is a lot of confusion about the systemic impact of aging on the rebalancing of the Chinese economy. The article cites Cai Fang as worrying that “China’s population could peak before 2025,” and that...
scmp.com/economy/china-…
2/6
this "could cause growth to plunge and lead to insufficient demand. It would generate an unfavourable impact on our push for consumption."
I think that's the wrong way to think about it. One of the main impacts of a declining population is to reduce overall growth.
this "could cause growth to plunge and lead to insufficient demand. It would generate an unfavourable impact on our push for consumption."
I think that's the wrong way to think about it. One of the main impacts of a declining population is to reduce overall growth.
3/6
Because the value of investment today depends in part on future growth, this also reduces the value of existing investment in property and real estate (implicitly forcing up the debt burden even further). A declining population makes rebalancing demand all the more urgent.
Because the value of investment today depends in part on future growth, this also reduces the value of existing investment in property and real estate (implicitly forcing up the debt burden even further). A declining population makes rebalancing demand all the more urgent.
4/6
But not necessarily harder. That's because China's deep demand imbalances are caused mainly by distortions in the distribution of income between economic sectors. How successfully China rebalances — and one way or another it will — depends almost wholly...
But not necessarily harder. That's because China's deep demand imbalances are caused mainly by distortions in the distribution of income between economic sectors. How successfully China rebalances — and one way or another it will — depends almost wholly...
5/6
on how successfully Beijing manages to transfer income from businesses and (mainly) local governments to ordinary households, either directly in the form of higher wages, or indirectly in the form of greater spending on social welfare.
on how successfully Beijing manages to transfer income from businesses and (mainly) local governments to ordinary households, either directly in the form of higher wages, or indirectly in the form of greater spending on social welfare.
6/6
This is mainly an income-distribution problem, and the longer Beijing postpones resolving it, the more costly the ultimate adjustment. China's very bad demographics will almost certainly make the adjustment cost higher, but it doesn't really change what Beijing has to do.
This is mainly an income-distribution problem, and the longer Beijing postpones resolving it, the more costly the ultimate adjustment. China's very bad demographics will almost certainly make the adjustment cost higher, but it doesn't really change what Beijing has to do.
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