Monday, 12 July 2010


An article in the free Newsweek magazine that accompanied me during my flight to Shanghai, inspired me to write this weeks journal. Newsweek is one of those magazines that reminds me of wikepedia, i'm never sure how true the facts, figures and numbers are? Having wrote the odd study myself, I know how much research is needed to put something together that talks about the differences across continents, countries and cultures. To get your facts correct takes months (or at least weeks) of investigation, analysis and confirmation. Yet Newsweek reals off story after story, full of facts, and figures. Either they have an army of writers, journalists and investigators or they make it up?

Either way the story entitled "The post-China world - The end of the boom is now in sight, and the ripple of slower growth will span the globe", made me think of another impeding crisis heading towards China's meteoric rise to arguably the most powerful nation in todays messed up world.

The story concentrated on the stabilisation of China's economy, slow down in growth and the similarities with Japans boom and bust economy 10 years earlier. It concedes that China's enormous population, and particularly the poor element of its vast human resource will probably continue to fuel cheap labour and cheap export for many years to come, but highlights the lack of passion for internal consumerism as a key reason why it will not be able to balance the drop in demand and competitive advantage it currently sees, as costs and particularly wages increase. True or not the story was backed up by the usual plethora of learned comments and W.H.O. Facts and figures.

The story I would like to tell is one that also suggests the demise of the country I am currently travelling to, and one that seems more like home than any other these days.
I had mentioned previously my old PA Hu Jin, a likeable character, educated in Malaysia and England he was amongst the 1st generation born as result of China's single child policy. Introduced in 1979 by Deng Xiaoping, the Policy was introduced to try and reduce the enormous population growth that burgeoned the countries development, and proved a massive drain on available resources. Growth which led to an extra 15 million people every year! *Growth between 1961 and 1980 ran at 2.2%.

The positives of the initiative are only visible on a balance sheet, it is estimated that the policy has prevented an extra 400 million joining the throngs. However to the foreign visitor, people still hang on for dear life from every nook and cranny, for example, the entire population of Toronto pass through Shanghais underground system every day, and the monthly number of children born in China is equal to the population of some of Europe's major Cities. The effect of this staggering growth leads to numbers like 15,500 new vehicle registrations in Beijing alone - every day! The numbers are mind-blowing, however without the restrictions in place, the situation would be much, much worse.

The negatives of the single child policy are evident only when you know them, and then start to look hard at the situation through the eyes of the young, the elderly, the adopted and the aborted. For every 100 female children born there are 114 males born, which is as a result of unnatural selection. The sexing of unborn babies through scans is illegal, however China has become the home of selective abortion, with more than 15 million official abortions per year (unofficial figures are much higher) or to put it into context, the population of Los Angeles aborted every year, why? Well a multitude of reasons, but mainly because they were female. Like many developing countries, China values sons over daughters, the difference in China is that due to the single child policy - you only get one shot!

The need to have a male son is not as you imagine to do with family name or male dominance in the workplace, in fact in many of the new industries responsible for Chinas incredible growth, females workers are dominant. I once visited a Japanese company called Takarta in a Shanghai suburb, where of the 3000 employees 2980 were female! specifically recruited for their dexterity, obedience and loyalty. Ever since Mao, the female worker has had as many rights as the male, in fact recent changes in employment law favour the female employee - on paper at least.

The need to procreate a male offspring is more to do with a complacency towards the state pension system. It was always expected that the senior son would take up the role of bread winner, carer and provider to his elderly parents come retirement. This was fine when you had 3 or 4 children, the odds were that one of them would outlive the parent, and one of them would be male. The introduction of a single child rule, has led to a concern that if you have a daughter and they get married - that they will be required to support their husbands family in old age, and thus leave the daughters family without a sponsor. The dependance on a son has become enormous and has led to a share increase in both selective abortion and female children being put up for adoption.

This I would suggest is one of the biggest single threats to the continued growth of China. Hu Jin is approaching 30, and his parents have just entered their 50's. They are the lucky ones, they have a son who will continue to provide and care for his/her parents long into old age. for the tens of millions who only have a single daughter, they have to hope that her husbands family are` younger, richer or healthier than them? Added together with the fact that people are now starting to live a little bit longer, and the labour market is getting tougher for the normally less educated middle to late aged employee, a vast problem dawns on the horizon.

As with all metrics in China the numbers are amazing, it is estimated that a current 134 million people are in retirement, and that this will increase to 500 million by the year 2050, and as the national pension scheme only encourages around 15% of the population to contribute, the planned shortfall is catastrophic. The overall slowing of population growth is one thing, couple this with ageing, lack of pensions system and the imbalance of the sexes all add up to a worrying future.

Nobody knows what will happen when an extra 100 million or two are added to the retirement list each year, but it is a sure recipe for civil unrest, in a country facing so many more civil liberty and unrest issues I wouldn't be surprised if this is the one that tips it over the edge!

No comments:

Post a Comment