A Simple New Rule That Guarantees China's Economic Power Trajectory For The Next 40-50 Years

Like it or not, we all have to contend with the USA owing to its sheer size and voracity as demand for exports, plus their lead in technology and education, and their reputation as a financial center (capital disbursement).

The above image classifies each of the states in the US by comparing their state GDP that is similar to another country's GDP. Hence whenever there is a downturn or rise in business confidence, it is akin to 50 countries moving at once in the same direction. That is why we have to follow what's happening in the US, and why Trump is so dangerous.

Look at the image carefully, one day very soon, China's map will resemble the above image. Sooner than you think.

China has surged up the charts for economic power by mobilising its rural class to middle or working class. It was the greatest economic miracle to do that on a capitalistic playbook on a socialised platform. A watered down kind of communism.

China has done very well in moving the rural class to working and/or middle class. That energised a substantive group of working consumers, fueling demand for all things. Education has always been big in China, and the last 15 years have seen many students venturing to study at solid colleges, and many have returned armed with stronger international networking and inroads into technology and international finance.

Naturally China has recorded huge amounts of surpluses and their not so secret strategy has been to recycle the surpluses into buying of "intelligent global assets" that have important patents or just to get a strong foothold into certain industries which are not familiar to Beijing. That's basically the unvoiced spat in the current trade war between the two countries.

What China could not develop fast enough, they would buy. So what's the problem?

Look at the demographics of China. Thanks to its one-child policy, by 2040 24% of the population in China will be 65 or older. You would then have to contend with a different set of problems (like Japan) where your labour base is not wide enough to support the retirees. Your stronghold as a consumption middle class will have new issues to tackle with a dwindling population curve.

China's population will be peaking at 1.45bn by 2030. An aging workforce can erode gains in productivity. The current birthrate of 1.7 needed to rise to 2.1 to maintain a steady population, thus ensuring its status as an economic power.

Already certain industries have shown that you need to have China as a market or you shouldn't exist at all - take the movie industry. Soon, in various guises, more and more industries will face the same equation. Be in China, market to China or die.

The think tanks in Beijing are obviously ahead of the curve on this problem. In 2016 Beijing abolished its one-child policy to "two is better". That had a knee jerk reaction as birthrates rose for two years after that but the overriding demands of the modern world saw marriages being further delayed and fewer couples wanting to have more kids as demands on their time and resources are high. 

Beijing is proactive here, it will probably remove the "two is better" policy altogether... go and have as many as you want, so as to pull the bell curve back up. There will still be a need for more incentives to ensure a birthrate of 2.1 but at least Beijing recognises this early and is willing to ditch the socialistic playbook for a LKY-styled pragmatic push forward.

Why The Population
- Create a sustainable workforce to support the retirees
- Replenish the middle class as the domestic economy is a priority to shield from economic crises overseas
- A consumer base that is enhanced (like the USA now) makes everybody kowtow to you for better trade ties, and indirect how your influence infiltrate the world of politics
- Better management of surpluses will allow for "control" and "dominance" over selected trade blocs, countries, shipping routes, access to certain prized assets/resources

That is why China has basically ensured its status as an economic power stays on a strong uptrend trajectory by taking care of the population growth.

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