Copyright The Atlantic – June 2016
On opposite sides of the globe, two debates that will profoundly affect the future of the United States, and indeed the world, are raging. One of them has become shrilly public, while the other remains almost secret. On the surface they might seem to have little to do with each other, but at bottom, they are inextricably linked.
The first debate, which is unfolding in America, concerns immigration. Republicans like Donald Trump and Ted Cruz have staked out some of the more radical positions in this debate, such as urging that the U.S. build a wall to keep out illegal immigrants and that it deport the millions who are already here. The other debate, which is playing out in Beijing, is about how big a navy China should build, and how much it should contest Americaâ€™s primacy in the worldâ€™s oceans.
To a degree scarcely suspected by most people, both debatesâ€”and more generally, Americaâ€™s chances of maintaining its standing in the worldâ€”are bound up in the two countriesâ€™ sharply contrasting population dynamics.
As if this were not enough to worry the U.S., China has also showed interest in moving into Americaâ€™s backyard. Easily the most dramatic symbol of this appetite is a Chinese billionaireâ€™s plan to build across Nicaragua a canal that would dwarf the American-built Panama Canal. But this project is stalled, an apparent victim of recent stock-market crashes in China.
Many economists believe that these market plunges are early manifestations of a historic slowdown in the Chinese economy, one that is bringing the countryâ€™s soaring growth rates down to earth after three decades of expansion. But the current slowdown pales in comparison with a looming societal crisis: In the years ahead, as Chinaâ€™s Baby Boomers reach retirement age, the country will transition from having a relatively youthful population, and an abundant workforce, to a population with far fewer people in their productive prime.
The frightening scope of this decline is best expressed in numbers. China today boasts roughly five workers for every retiree. By 2040, this highly desirable ratio will have collapsed to about 1.6 to 1. From the start of this century to its midway point, the median age in China will go from under 30 to about 46, making China one of the older societies in the world. At the same time, the number of Chinese older than 65 is expected to rise from roughly 100 million in 2005 to more than 329 million in 2050â€”more than the combined populations of Germany, Japan, France, and Britain.
The consequences for Chinaâ€™s finances are profound. With more people now exiting the workforce than entering it, many Chinese economists say that demographics are already becoming a drag on growth. More immediately alarming are the fiscal costs of having far more elderly people and far fewer young people, starting with the expense of creating the countryâ€™s first modern national pension system.
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