Friday, March 17, 2006

Good for something

Experts are predicting that China will soon be experiencing a population problem. An under-population problem.

Recent reports from researchers at Deutsche Bank and Goldman Sachs suggest that China's workforce may begin to shrink sooner than we thought. According to Deutsche Bank's analysis, the percentage of working-age Chinese in the population (those aged 15 to 64) will peak around 2010 at 72.2 percent. Over the next 40 years, that number will fall steadily to just 60.7 percent, according to U.N. forecasts. The steep drop is due in large part to China's one-child policy, first implemented in 1979. Also, many Chinese retire before they are 64; China's current retirement age is 50 for most women and 60 for most men.

There are two reasons this shift will put considerable strain on China's economic performance. First, the country's explosive economic growth over the last several years is due mostly to its plentiful supply of cheap labor. When the working-age population begins to drop five years from now, China's appeal to international investors may begin to fall as well.

Second, by 2050, every 10 Chinese workers will support seven Chinese who are too young or too old to work, according to Goldman Sachs. Even that projection is based on the optimistic assumption that the central government will soon persuade its citizens to work until they are 64. The Deutsche Bank study includes a warning from the International Monetary Fund that the transition from the current pension system to a more sustainable one could cost developing China $100 billion, not including the financial burden on local governments.

Funny that the countries which were supposed to have too many people are now predicted to have too few. But it should come as no great surprise: Malthus was wrong. God created an abundant earth, and there is still "enough and to spare" -- especially if we use our ingenuity.

Necessity is the mother of invention, and as human beings have needed to get more productivity out of limited resources, we have continued to find new ways to live, thrive, and survive. People consume resources, it's true, but they can also be resource multipliers, through innovation and hard work.

Dean Esmay is right: People are good for something.


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