The Decline of China's Economy - Will it Ever Pass the US?

Sunday - June 25 2023, 23:03 UTC - 1 year ago

China's economy is stalled over the 10-15 years due to its declining and aging population. Megacity regions offer 15-30% one-time boost, however the US's Gen Z population make it very unlikely for China to pass the US economy in exchange rated terms. The only way it would pass the US's GDP is if the US dollar fell substantially.

China's economy will be stalled for the 10-15 years as its population and working age population shrinks and ages. However, after the stall is the steep fall where China's population gets even older, there is no more urbanization and the population shrinking gets worse. China can offset some of these problems with megacity regions. This is merging many cities around Shanghai, Beijing and Hong Kong into super-regions .

However, those would be one-time 15-30% boosts over two decades or so. China was able to follow the Japan model for an economic rise but China has fallen into the low fertility-aging population trap. The development of radical antiaging is needed for these problems to be reversed. This means developing super-medical technology that can reverse aging damage which would make people in their 80s and beyond like people in their 30s .

China will NOT pass the US economy in exchange rated terms. China's population is already declining and the working age population will shrink substantially. The US economy was $25.5 Trillion in 2022 while China's was121 Trillion Yuan 2022 (US$17 trillion). China is 48% below. Losing working age population with some rural replacement means there is no 1-3% per year boost in productivity from increasing working age population and urbanization .

The US has generation Z emerging as economic demographic driver for the next 10-15 years. The Best case China picks up 2% per year but more likely holds even or falls further back. China median age going from 37.5 to 43 from 2023 to 2030. This is like Japan's median age shift 2002-2009. China would need the US dollar to collapse for it to pass the US GDP on an exchange rated basis. China will want to keep its currency weak by design or unintentionally .

China's overall economy is larger than the US on a purchasing power parity basis. It is about 1.2 times bigger than the US. China now might get to 1.3 to 1.4 times bigger than the US economy and then peak at that level on a purchasing power parity basis. A lot of China's population will be heading over 60 in the next seven years. Perhaps 10% of China's population will retire and another 10% will be far less productive in their 60s .

Consumption and economic activity also declines drastically for people in their late 50s and 60s.