The Tipping Point: China and India

The Tipping Point: China and India

China and India are special cases within the large population developing economy cohort. China’s population is 1.4 billion people. India’s population is 1.4 billion also and is expected to exceed China’s population in a matter of a few years. Together, they have 2.8 billion people, or 35% of the global population. What happens in China and India will determine what happens to world demographics to a great extent.

According to World Bank statistics, China’s birth rate is 1.7 and India’s birth rate is 2.2. The average of those two birth rates of roughly equal populations is 1.95. Shockingly, China and India combined are already below the replacement rate.

The birth rate in both countries is dropping quickly, so China and India will individually both be below the replacement rate soon. The global population giants are shrinking almost as fast as the developed world.

Made in China?

China’s situation is far worse than this high-level data suggests. There is some reason to believe that China’s birth rate figures are overstated for political reasons, and the actual birth rate is close to 1.1, or lower. That will produce a shocking rate of decline.

China’s one-child policy from 1980 to 2019 led to between 30 million and 60 million cases of sex-selective abortions or female infanticide — baby girls were drowned in a bucket of water kept next to the delivery bed. The normal sexual skew is 105 boys to 100 girls. China has been producing 120 boys to 100 girls by killing girls. This means future reproductive potential is even lower than the low birth rate implies because of ‘excess’ males who cannot have babies.

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The Chinese case

Researchers Darrell Bricker and John Ibbitson summarise the Chinese case as follows:

The Chinese population will fall to around 754 million by 2100, a quarter billion people below the UN’s medium estimate, and an astonishing 630 million fewer people than are alive in China today. China’s population could decline by almost half in this century. And even that is not the lowest-case scenario. If…Lutz’s Rapid Development Model…turns out to be accurate, the population could collapse to between 612 and 643 million. Several hundred million people could disappear from the face of the earth.

This has implications far beyond economic growth and world trade. A collapse of this magnitude would result in a crisis of political legitimacy and could presage the collapse of the Communist Party of China. Bricker and Ibbitson conclude:

China appears to be on the verge of a deliberate, controlled, massive collapse of its population. Nothing like this has ever occurred.’

India is close behind

India is hovering slightly above the replacement rate. But the same issues noted above — urbanisation, education, and women’s emancipation — are at play in India.

The most likely outcome is that the birth rate will drop quickly, not gradually as the UN projects. India has been even more aggressive than China in the implementation of family planning (without a formal one-child policy). These family planning policies include free condoms, birth control education, and surgical sterilisation.

The expectation for India is that the population will increase from 1.4 billion to about 1.5 billion, and then decline quickly to 1.2 billion by 2100. That’s a 15% decrease from current levels. It’s not a collapse of the magnitude expected in China, but it’s still a striking decline. Any decrease is a far cry from the popular narrative of out-of-control population growth in the developing world. That’s simply not happening.

These demographic changes will have a big impact on the world economy. In the next edition of The Daily Reckoning Australia, we look at who the winners and losers might be, and what this means for your investments.

Regards,

Jim Rickards Signature

Jim Rickards,
Strategist, The Daily Reckoning Australia

PS: This content was originally published by Jim Rickards’ Strategic Intelligence Australia, a financial advisory newsletter designed to help you protect your wealth and potentially profit from unseen world events.