China: Big Problems Lurk!


China: Big Problems Lurk!

China has very big demographic problems. Is this situation meaningful for us folks interested in US manufacturing at present or soon? We shall see.

All of a sudden, a large number of news sources are reporting a potential demographic crisis beginning in China. We wonder what this means for OEMs with Chinese manufacturing. The government has a very major issue dealing with these things and still maintaining a manufacturing powerhouse.

Apparently, for the first time in decades, the Chinese population has decreased by 100,000 or so to something on the order of 1.4 billion. Not only that but India is projected to exceed China’s population shortly and become the world’s #1.

Among the demographic factors at play in China are a rapidly aging population. Birth rates are very low, and life expectancy is up. There’s concern that the aging population won’t have sufficient numbers to support the aging segment.

Japan has a big aging problem as well, but apparently has some strategy for dealing with it. China? Not so much!

Efforts to increase birth rates have not worked. The one-child policy of years ago has been eliminated, but the people have not responded. Not only that but there are approximately 30 million more men than women in China.

Just for fun let’s imagine a country with 30 million men, most of whom would be looking for female partners. You’d think this would be good news for women interested in starting families, but evidently that’s not the case in China.

From one New York Times report:

“Over the last four decades, China emerged as an economic powerhouse and the world’s factory floor. The country’s evolution from widespread poverty to the world’s second-largest economy led to an increase in life expectancy that contributed to the current population decline — more people were living longer while fewer babies were being born”.

From the Washington Post:

If not addressed, Yi [Yi Fuxian, a scholar at the University of Wisconsin at Madison] argues, China’s rapidly aging society will undercut Beijing’s vision of itself as an ascendant power poised to overtake the United States. A loss of economic dynamism undercuts the country’s current cheap, labor-reliant development model, while the lack of a robust social security net or pension system could “evolve into a humanitarian catastrophe,” he said.

One way to address an aging population is through immigration. This is apparently not the case in China. From the Migration Policy Institute:

“…international mobility has retained an ambiguous position in the nation-building project, which has been defined around China’s self-sufficiency. The strict border-control measures in response to the COVID-19 pandemic were illustrative of this tension. Because of lingering political sensitivity around international mobility, legal and institutional frameworks for managing migration have lagged. For immigrants and returning migrants, there has been a narrow focus on migration’s economic benefits, while broader questions of integration and societal diversity remain unaddressed. Pathways for permanent residence remain extremely limited. Despite China’s looming demographic crisis, there is also little long-term planning for future immigration that might be needed to offset consequences of population aging”.

“China’s immigration framework remains incomplete and is often ill-suited to the realities of recent de facto permanent immigration, with many migrants settling in China without ever gaining full residency rights. Its visa categories are restrictive, with migrants on spousal or student visas unable to work. And immigrants lack robust labor rights. The rigidity of the system also became apparent during the COVID-19 pandemic when entry to the country became limited to Chinese nationals and the few immigrants who hold permanent residency”.

Clearly the Chinese government has difficult issues associated with a shrinking, aging, and out-of-balance sexual mix population. Without a strong immigration policy to somewhat offset these, what might this mean for Chinese manufacturing? How will they continue to staff the manufacturing engine for the essential export economy?

Perhaps this is good news for us in the US. We at Proficient Sourcing can source most manufacturing needs very quickly. If this is something of interest, give us a call at (513) 489-5252. We’re ready whenever you are.

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