We’ve written quite a deal about America’s baby boomer but China has it’s own problem with their population. Unlike the US where the problem is simply aging, China’s problem is both aging and the net effect of their “one child policy” that largely resulted in more males being born than females because couples were only given the option of having one child and most chose to have a male child.
The Wall Street Journal had an excellent summary of the origin of the problem written by Liyan Qi which you can find here. In a summary, China imagined that child birth would be as easy as flipping a switch to on/off and encourage or discourage births however culture and society doesn’t function quite that easily. Births or lack there of are often driven by a combination of a variety of factors including ability to find the right mate, ability to produce a child, ability to raise a child and the right economic conditions to foster success for the child.
Back in October of last year, Forbes has an article written by Simon Constable that dove into the economic problems China will encounter over the next 15 years which aren’t too dissimilar to what will happen in the US over the next decade.
“China’s population is aging rapidly, with the most productive members of the labor force set to retire in less than 15 years,” the Frost report states.
Forbes.com
For Americans that have benefited and profited from low cost labor in China for decades now, that gravy train is about to slow to a crawl. For Americans dependent on incoming goods from low labor China, they may be in for a rude awakening in 2030 when both countries begin suffering from productive labor.
Ultimately, industries such as manufacturing will find new pools of young and cheap labor and there will be a restructuring of the economic world order. The smart thing to do is figure out where that realignment will take place and invest accordingly.
Stay tuned and stay solvent.