Techsavvy

Why China won’t be #1 economy in 2050

A little background first.

I visited China back in 1999. I remember every damn shit toys from Tazzos to even shirts had ‘Made in China’ tag. I was just 12 and it was like dream come true to visit the place where all my toys were made. I went with my uncle and his family, who used to import goods from China. Once during his market shopping, I tagged along. 

I liked a swiss knife and I asked my uncle to buy me one. When enquired about the price the guys asked us what can we pay for it. Now this was new to me. Here in India, when I buy something, everything has a fixed price. So we asked him for how much he would offer it. What he said kind of astonished me. I’ll just paraphrase it: You tell me how much you can pay and I’ll make one in that range. I asked if he could make one for 2 Chinese Yuan and he said yes. The only term was we shouldn’t go to some other shop. 

I got one done for 15 Yuan, I think. I only vaguely remember.

China has always fascinated me since then. Everyone is projecting China to be #1 economy by 2050 and with consistent growth rate of 10% in GDP it’s easier for analysts to predict. But personally, I don’t think China will be number 1 economy by 2050. And here’s why:

China enjoys close to 30%(29.45%) of its GDP growth thanks to export. [1]

Most of the industrial output from China still comes from ill-equipped factories that needs manual labor. Currently that manual labor is surplus in China. But thanks to China’s 1 child per family policy introduced in 1978 their age distribution demographic is getting hampered to the point that it’s embarrassing. Most of the families prefered a male child and thus has their sex ratio deteriorated. 

In 2010, there were 51 million more men than women in the country. At this rate, there will not be enough brides for as many as one-fifth of today’s baby boys when they get to marrying age, heightening the risk of social tensions. [2]

Here’s the chart for age distribution [3]

If you notice over the years the average median age is only going to rise and number of working population and even the percentage will be going down. The percentage of elderly population will rise which means the burdon on working population which is in  decline, will increase.

I could be wrong like every other analysts who predicts economy growth but I firmly believe there’s no way China is getting ahead with their current scenario.

The other option for growth is their property, which if you ask me, has its bubble already burst.

Chinese government has built tons of cities across the country which are now abandoned. And it’s not just one or two cities. There are tons of abandoned cities out there in China. Or 64 million vacant homes [4]

Developing countries that have my attention these days are Brazil and Mexico. Both the countries are with young population, and plenty of investment opportunities.

[1] http://www.google.com/publicdata/explore?ds=d5bncppjof8f9&mety=neexpgnfs_zs&idim=country:CHN&dl=en&hl=en&q=china+export+gdp

[2] http://articles.businessinsider.com/2011-11-07/markets/30368668_1_ratio-nomura-china

[3] http://www.wolframalpha.com/input/?i=China+age+distribution

[4] http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html

Software Engineers with psychology minors are going to be in great demand in next few years.