China won't be able to "bailout" the US economy with cheap goods and huge consumer market for much longer.

[touchring]

For those who say free trade is good because it lowers inflation and helps to sell more iPhones, this argument won't stand much for longer.

China's population is aging rapidly, faster than anywhere in the world because of 1-child policy since the 1980s.

For every 2 parents, there is only child working to support them. It's an overwhelming odd to be able to afford to support 2 parents along with a super expensive x20-x30 annual income apartment, so most Chinese millenials can only afford one child, many go childless.

In 20 years, there will be only 1 grandchild working to support 2 parents and 4 grandparents. 1 working adult to 6 dependents. By then, Chinese factories will be run by robots, not humans. China would still export goods manufactured by robots, but will import nothing other than food and medicine to feed the elderly as the massive consumer market will no longer exist by then.

"No Longer Reversible": China's Low Fertility Rate And Birth Restrictions Set Stage For Disaster

While China has embarked on ambitious plans for economic and military domination over the next several decades, they may end up defeating themselves without a single shot fired - thanks to their longstanding birth restrictions, shrinking fertility rate and exploding elderly population.
Economically speaking, the problem is easy to understand; a shrinking labor pool due to restrictive reproductive laws tends to drive up wages, while a rapidly growing elderly population requires more spending on pensions and health care. "In a worse-case scenario, slowing growth and a labor shortage could leave China unable to care for hundreds of millions of retirees," notes the Wall Street Journal.

China’s clinging to birth restrictions defies a clear demographic trend: Its workforce is shrinking and the population is rapidly aging. By 2050, there will be 1.3 workers for each retiree, according to official estimates, compared with 2.8 now.
No matter what the government does now, it is too late to significantly change the overall trend because of social attitudes, say demographers such as Gu Baochang, a professor of demography at Renmin University in Beijing. -WSJ

While some experts have argued that slower population growth could mitigate pressure on China to create new jobs as technology increases productivity, others think China is in deep trouble...
“They should have lifted all birth restrictions before 2010,” says Baochang. “Whatever steps they take now, China’s low-fertility trend is no longer reversible.” In three decades, 1/3 of China's population is predicted to be over the age of 60.

The chart below shows annual change in million persons (red line) and total child bearing population (blue columns). From 2018 through 2033, China (with net emigration, to boot) will see an average annual decline of nearly 6 million Chinese capable of creating more Chinese (or the equivalent of losing the population of a Missouri, Wisconsin, or Maryland every year for at least the next decade and a half). -Chris Hamilton, Economica blog

https://www.zerohedge.com/news/2018-...ions-set-stage

[GRG55]

Re: China won't be able to "bailout" the US economy with cheap goods and huge consumer market for much longer.

The yuuuge consumer market in China has always been a fantasy. It started being breathlessly touted by VPs of western multinationals and the Wall Street analysts thirty years ago. Look at that...a Billion people! Unfortunately most of them couldn't rub two renminbis together. Difficult to sell them sedans, but maybe some soy beans.

So the PBOC set out to fix that problem with the mother-of-all-liquidity-injections. And look what happened.

There are more Mainland Chinese citizens trying to get themselves and their kids into the USA than the converse. If that changes I might reconsider which economy is the better long term bet.

[Mega]

Re: China won't be able to "bailout" the US economy with cheap goods and huge consumer market for much longer.

Question, will intrest rates ever return?......................you know the good old days of +6% ?????
Mike

[GRG55]

Re: China won't be able to "bailout" the US economy with cheap goods and huge consumer market for much longer.

Question, will intrest rates ever return?......................you know the good old days of +6% ?????
Mike

Maybe. But if it does let's hope it's slowly, so overleveraged households, companies and governments can adjust.

[touchring]

Re: China won't be able to "bailout" the US economy with cheap goods and huge consumer market for much longer.

The yuuuge consumer market in China has always been a fantasy. It started being breathlessly touted by VPs of western multinationals and the Wall Street analysts thirty years ago. Look at that...a Billion people! Unfortunately most of them couldn't rub two renminbis together. Difficult to sell them sedans, but maybe some soy beans.

So the PBOC set out to fix that problem with the mother-of-all-liquidity-injections. And look what happened.

There are more Mainland Chinese citizens trying to get themselves and their kids into the USA than the converse. If that changes I might reconsider which economy is the better long term bet.

Actually, most middile income Chinese consumers have got very little disposable income after paying for their apartments and investment properties. What little they have got left is spent on overseas vacations, luxury goods such as European handbags and iPhones, etc. In most cases, there is not enough left to support more than 1 kid.