Fri, 24 Mar 2023

Beijing [China], March 14 (ANI): The Financial and Economic Affairs Committee of the 14th National People's Congress (NPC) has developed a list of recommendations to ramp up efforts to expand domestic demand, improve the business environment for private companies and prevent financial risks etc.

These recommendations are in line with the guiding principles of the 20th National Congress of the Communist Party of China (CPC) for the overall development of China.

According to the committee, development is top on the priority of Xi Jinping's government but many experts disagree with Xi's growth formula. Many economists said that China's economy is ailing and its worrisome symptoms persist. Some said that China's prime time is past or is coming to an end.

Yi Fuxian said that Chinese leaders have long staked their policies on the assumption of a rising East and declining West, but China is already past its prime. The gap between its declining demographic and economic strength and its expanding strategic ambitions now constitutes a major geopolitical risk, stated Fuxian who is a senior scientist in obstetrics and gynaecology at the University of Wisconsin-Madison.

Author of Big Country with an Empty Nest, Fuxian said that all of China's economic, foreign, and defence policies are based on faulty demographic data. In January, China officially acknowledged that its population began to decline last year - roughly nine years earlier than Chinese demographers and the United Nations had projected. The implications of this are hard to overstate.

According to him, economic predictions by Chinese economists are baseless. Chinese economists predicted that by 2049, China's per capita GDP would have reached half or even three-quarters that of the United States, while its overall GDP will have grown to twice or even three times that of its rival. But these forecasts assumed that China's population would be four times that of the US in 2049. The real figures tell a very different story, stated Fuxian.

Assuming that China is lucky enough to stabilize its fertility rate at 1.1 children per woman, its population in 2049 will be just 2.9 times that of the US, and all its critical indicators of demographic and economic vitality will be much worse."They imply a geopolitical butterfly effect that could ultimately destroy the existing global order. Chinese authorities have been acting in accordance with their longstanding belief in a rising East and declining West.

Population ageing will be a permanent major drag on China's economy. After all, as Italy's experience shows, the old-age dependency ratio (the number of people over 64, divided by those aged 15-64) has a strong negative correlation with GDP growth, as does the median age and the proportion of people over 64.

According to him, China's heavy investment in artificial intelligence and robotics to offset the economic drag of ageing, would not yield desired results. That's because innovation essentially relies on young minds.

Moreover, robot workers do not consume, and consumption is the major driver of any economy. According to Fuxian, China's decline would be gradual. It will remain the world's second or third-largest economy for decades. But the huge gap between its waning demographic and economic strength and its expanding political ambitions may make it highly vulnerable to strategic misjudgments, he pointed out.

He cautioned that China's leaders should wake up from their unrealistic "Chinese Dream" of national rejuvenation. The government's current policy approach is a formula for demographic and civilizational collapse and nothing else.

According to an article in New York Magazine, China's grotesquely overinflated property bubble is at perpetual risk of bursting. A youth-unemployment crisis plagues its major cities. A perennially underpaid labour force is struggling to prop up consumer demand. And the demographic collapse wrought by the one-child policy has just begun. Michael Pettis, a senior fellow at the Carnegie Endowment for International Peace lamented that the economic trajectory of the world's most populous country has profound implications for its trade partners and geopolitical rivals. Pettis argued that China's economic policies increase global inequality and reduce American prosperity.

Pettis pointed out biggest headwinds facing China's economy in 2023 are problems in the property sector, high youth unemployment and a falling population. It won't be easy for the Xi government to tackle these problems in the years to come. (ANI)

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