The horizon is not so far as we can see, but as far as we can imagine

China Already Has Almost 430 Million People With First World Incomes

If you wonder why America has become so hostile to China, it comes down to this.

Back in the 80s, Japan looked like a threat. If fizzled, in large part due to some mismanagement, but the truth is it was never really a threat, because it didn’t have the population to be one, and while highly technologically advanced, it wasn’t a generation ahead of the US, or likely to make that leap.

China already has a first world population that is larger than America’s. Oh, they earn a little less, but they still qualify as “rich” by global standards.

Technologically it is not as advanced, but it’s catching up. The furor over Huawei 5G is because Huawei has the lead in that technology, and so many countries are going with their technology. China produces far more engineers and scientists than America, and they are growing in competence.

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The most important region in the world for electronics manufacturing is Shenzhen. Oh Silicon Valley still matters for design and software, but for actually building things, Shenzen is where it’s at. And they’re catching up in design and software.

Back in the late 19th century, when America became the largest economy, Brits consoled themselves that they were still creating most of the new inventions (and the Germans were inventing a lot of the rest).

It didn’t last. The inventiveness moved to where the factories were.

So China is a real, credible, threat. For most of the last 2,000 years it’s been the world’s most advanced region, with the largest economy. (Before that it tended to be India, and before that it was usually the Tigris-Euphrates region.)

The last two-hundred years, in which China wasn’t the world’s greatest, most advanced economy, are an aberration. Europeans industrialized, and industrialization was an order of magnitude more powerful than agricultural civilizations.

That period is over. China is industrialized, has information tech, and so on.

There are two great threats to the rise of Chinese hegemony. The first is a population time bomb, even worse than the Japanese. All of that “one child policy” is about to come back and bite hard. The Chinese, however, know that, and it is why they are trying to make gains now, in the South China Sea and with the Belt and Road Initiative. They recognize they have a window, and that they must use it.

The second is climate change and ecological collapse. China will be hit hard. The south is subject to both heat and rainfall problems; the Chinese have vastly overused their aquifers, and climate change in general is going to hit their food production hard.

The first threat is serious, the second one may be existential. But the other great powers are facing these threats, in various forms as well.

For now, America is freaking out over China because China is actually a threat to American hegemony. It’s that simple.

What is also true is that, historically, this leads to war more often than not.


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  1. venkat

    And the western industrial revolution was both funded and demand-driven by colonisation and the slave trade.

  2. bruce wilder

    The first is a population time bomb, even worse than the Japanese. All of that “one child policy” is about to come back and bite hard.

    I am hoping you might expand on this just a little bit. I understand China’s huge population is a manifold source of problems. I do not understand what mechanism you are particularly pointing at, when you refer to “time bomb” nor why you think the “one child policy” is implicated (surely, you cannot imagine they had an alternative to a policy of severe restrictions on population growth).

    Are you trying to say that the aging of China’s population is a problem? In addition to the difficulty of finding employment for everyone in the first-world industrial economy that they’ve built?

    Just trying to understand the argument.

  3. ponderer

    Yes, you are right. In fact, Chinese factories are moving operations to lower labor regions like Vietnam. The west started devaluing STEM a long time ago. There’s still money to be made, and the US is still 2nd behind China. We consume most of our own production though and the downward trend is obvious to anyone in the field. For today’s graduates its probably a waste of time. Besides the older workers forced to hang on, the 1 million immigrants that come in every year are for those “good”. We’ve become rampant consumers, as have the Chinese the question is such a trade imbalance sustainable.

    On OCP. It’s the same as the babby boomers. There’s not enough working population to take care of retires. It’s just more pronounced in Japan, and worse in China. Here’s the thing though, if they take over other countries or import people like we’ve done with immigration, they can lessen the effects. It seems likely to me that they will be taking territory somewhere in order to do so.

  4. Dan Lynch

    All of that “one child policy” is about to come back and bite hard

    As Bruce said, this needs clarification.

    OVERpopulation is a problem. A stagnant, or even a shrinking population, is not a problem.

    Oh, a shrinking population is a big problem for capitalists, because capitalism needs growth. Corporations want more customers. Who wants to buy stock in a company that has flat sales?

    But, if managed properly (which capitalism does not do) shrinking population is a good thing. It means there are more real resources per capita. More land, more water, more everything per capita. Less crowding on the road, less crowding in national parks, less pollution, and so on.

    As for hegemony, Denmark does not have hegemony, but they have a higher quality of life than either the U.S. or China. I favor self-reliance, not hegemony.

  5. Dan Lynch

    Re: taking care of retirees.

    There is zero evidence that any country lacks the resources to take care of its retirees.

    There is no shortage of goods in Japan. Retirees have enough to eat, enough clothes to wear, enough electronic gadgets to pass the time, etc..

    Most old people live at home and take care of themselves until the end, as long as they don’t develop severe dementia or have a stroke that leaves them paralyzed.

    But let’s imagine, for the sake of argument, that the labor market is so tight that there are no workers to take care of the demented and the paralyzed (never mind that, as David Graeber has pointed out, there are millions of bullshit jobs that don’t produce anything useful to society, and in a sane world we’d free those workers up to either do useful work or allow everyone more leisure time). Worse case, if there are no workers available to take care of the demented and the paralyzed, then you deal with them the same way you deal with Fluffy and Fido when they are suffering and no longer able to function normally. So worse case, your demented grandma is put to sleep, rather than spending the last months of her life being miserable while drooling in a nursing home, wearing adult diapers. Would that be such a bad thing? Heck, it might be an improvement!

    So I’m not seeing a problem with this “who will take care of the retirees?” business.

  6. Ian Welsh

    The higher percentage of your population taking care of retirees, the more GDP, the less there is to do other things.

    If you don’t believe this matters, take a good long look at Japan.

    Jaysus. I support lower populations, but ignoring that it isn’t all roses is silly.

  7. RobotPliers

    A stagnant or shrinking population, when the result of low birth rates and long lives, is a problem for democratic governance.

  8. nihil obstet

    Dean Baker has been taking looks at Japan for some time now, criticizing the view that Japan is running out of workers, or subject to falling per capita GDP. Here are two over the last decade: Japan can expect to become less crowded and The Bizarre Story of Japan’s Ailing Economy. As nearly as I can figure out, the “lost decade” has to do with corporations making lower profits than they would like because of selling fewer consumer goods at home. Selling fewer consumer goods is something we’re going to need to do to lessen ecological disaster.

    I can’t think of many other things in the U.S. that need doing more than taking care of retirees. What does need doing that a shortage of workers is preventing from being done? As the post points out, we need to bring the factories home because the inventions and innovations are done near the factories, but it’s not a labor shortage that’s keeping the factories offshore. And there’s plenty of excess labor tied up in the American FIRE sectors, especially the finance and insurance parts.

    The question I had at the end of the post was how hegemony may be exercised if you’re not running a financial system that can prey on the resources of other countries as the U.S. does.

  9. bruce wilder

    A stagnant or shrinking population, when the result of low birth rates and long lives, is a problem for democratic governance.

    Pretty much everything is a problem for democratic governance.

    Historically, the preponderance of the young in rapidly growing populations was a challenge for democratic governance that many nation-states did not handle well.

    The higher percentage of your population taking care of retirees, the more GDP, the less there is to do other things.

    Well, yeah. That is a logical relation, but is it now or likely to become a critical factor for China in the next 20 years? It will be a factor, but will it be a problem that must be solved? Or just something they have to adjust to, as consequence of limiting population growth?

    I can see China having problems because the industrial economy they have created does produce a high-income economy for 430 million people, but not the population they have. The 600 million who are never leaving rural poverty would seem to me likely to be source of political strain. The aging of the population that is a necessary consequence of limiting population growth may well compound that problem in certain ways. But the base problem is that China is a swarm of industrialized locusts bigger even than the USA swarm of locusts.

    What is also true is that, historically, this leads to war more often than not.


    I will note that young countries are more likely than old (speaking of demographics here) to become politically unstable and aggressive in relation to other great powers.

    When the U.S. eclipsed the UK in the late 19th century, the UK response was the Great Reproachment. Germany had no prospect of achieving world domination; it was frustration that fueled aggression.

    China, as you point out, is virtually assured of world domination — only resource shortages are a factor, but they have a more or less feasible strategy for securing access by means and routes the US cannot deny them.

    The risk of war rests with the poor quality of US political leadership and it’s commitment to predatory global finance. The US has an option for isolation and autarky that might have the promise of less bad outcomes, but the political classes are in love with financial predation and cosmopolitan self-regard. They know war only as a form of financial predation.

  10. Albertde

    The real problem with China is that, since couples could only have one child and Chinese want to have sons, they aborted the girls and now have a huge surplus of boys, who will not be able to marry unless the government allows them to seek brides from other countries and, given the numbers involved, there likely won’t be enough women available.

  11. seattle resident

    @Dan Lynch

    I have a mother in law, who isn’t suffering from dementia nor has suffered a stroke, that had spinal fusion surgery and walks with the help of a walker. However due to her physical incapacity, she had to move from the bay area to a senior retirement facility (and a gold plated one at that- she made good money and invested well) in suburban Seattle.

    The larger point is that due to increased incapacity in physical and mental acuity due to old age, even in the absence of dementia or stroke, many elders end up requiring extra care, either from a senior retirement home or home aide visits. But for many, health care is so expensive that euthanasia may be the only option for those who can’t afford an old folks home, don’t have relatives who can take care of them and prefer not to be broke, homeless and incapacitated by old age.

  12. Hugh

    OT mostly although someone did mention the job market.

    The BLS jobs report covering May 2019 is out. 778,000 private sector jobs were created in May. Usually something just under a million are. May is the second to last month of the jobs build. After June, pretty much everyone who is going to be hired has been hired until large scale hiring resumes in October. Looking at net job creation to date (Jan-May job creation minus the previous end of the year Dec-Jan job drop off), 428,000 net jobs have been created in the private sector so far this year. This is 469,000 fewer to this point than the 897,000 of my 2014 baseline year.

    Looking at total nonfarm jobs (private sector plus public sector), only 687,000 were created in May, a couple hundred thousand fewer than usual. Net job creation to date for 2019 is 426,000 versus 945,000 in 2014, a difference of 519,000.

    I think we can safely say that 2019 will be a shitty year (sorry for the technical parlance) for jobs. MAGA, as the great Inigo Montoya would have said: “You keep using that word. I do not think it means what you think it means.”

  13. Bill Hicks

    The third threat is peak oil and energy depletion. The world is already starting to scrape the bottom of the barrel in terms of fracking and deepwater drilling. Renewables are not going to be able to replace more than a fraction of of the energy provided by hydrocarbons, certainly not enough to support a nation of 1.5 billion people at anything resembling a modern middle class lifestyle. All three threats are likely to reach crisis proportion in the next decade or two–and the fight between China and the other world powers for the world’s remaining resources could very easily trigger nuclear war. However it plays out, there are unlikely to be any real “winners.”

  14. someofparts

    I’m one of those impoverished, isolated old folks that a couple of people have suggested will need to be euthanized down the road. Interesting way to “win” the death bet I guess.

  15. Herman

    The whole argument around developed world birth rates is a bit odd. On the one hand we are told that we are going to face a jobs apocalypse when automation really speeds up in the near future and we will have a massive number of unemployment people. But on the other hand, we are told that falling birth rates mean that we will have a labor shortage and this is used as an argument for increased immigration.

    Personally, I don’t see fewer people as much of a problem. If we are going to face resource limits and limits to consumerism then a smaller population might be a good thing. As for China, again, more and more people demanding a Western lifestyle is not a good thing. Westerners themselves will likely have to get used to a more limited lifestyle in the future if we want to save the planet.

  16. lateStarter

    I was thinking that eventually Russia might \’invite\’ some Chinese surplus population to settle in some underdeveloped areas, as opposed to having them just take it. As long as Russia can sell them gas, it is a plus for core Russia. Hopefully they can find a way to cooperate.

  17. Ché Pasa

    What kind of world would we be living in if the Anglo-Euro-American imperial project hadn’t collapsed post-WW2?

    I suspect China wouldn’t be considered a threat. Likely it would have been dismembered and its parts assigned to various client rulers or distributed among the Western Powers to rule directly as colonies.

    Africa, of course, would not be littered with independent failed states, nor would the Middle East. India would be ruled by the British Raj as of yore. Indonesia would be ruled by the Dutch. Indochina by the French.

    Defeated Germany and Japan might be still be mired in devastation and occupation by the victors. The Soviet Union might still be in business, but without its Eastern European protectorates and likely unable to rebuild or repopulate after the devastation of the war.

    Many areas of Central and South America might be ruled directly from Washington or Wall Street.

    Global population might be half what we see today; perhaps even less, for empires are notorious for the strategic use of famine and disease to keep their subjects in check. Even in the home countries the poor and downtrodden would remain so; the rich and well-connected would thrive.

    Empires might still contend with one another, and the quest for self-determination by subject peoples would continue unabated, but mostly it would be futile. Guerrilla wars would break out and be brutally suppressed.

    Of course the End of Empire would continue to be predicted, and yet it would be endlessly delayed.

    Some people, too, would be convinced they lived in the Best of All Possible Worlds.

  18. Bochen

    Name correction: it\’s Shenzhen not Shenzen.

    By the way, the drastic low birth rate caused by the one child policy is already causing damage to the working class. More often then not a single child in his/her mid 20 needs to support 3/4 dependents from the family.

    But as a Chinese myself, I see the one child policy as a necessity at the time, it was the right move with a certain price to pay.

  19. bruce wilder

    @ Che Pasa

    What kind of world would we be living in if the Anglo-Euro-American imperial project hadn’t collapsed post-WW2?

    Didn’t the collapse of European Empire as a viable organizing principle occur during the First World War? The American liberal order of (benign?) hegemony was an explicit objective of the western Allies in WWII. That was not collapse after WWII so much as planned obsolescence, an evolution in adaptation to endogenously changing circumstances. I cannot make it work in my head as an “accident” of history.

    The UK was supporting the U.S. Open Door for China even before WWI got started. No one in the Anglo-American world of international relations thought subdividing China was a good idea even when rival warlords were rampaging to and fro. I am not saying this was a view motivated by altruism; i am saying it was a practical accommodation that suggests an English East India Co for China had long since ceased to be a possibility.

  20. Ché Pasa


    The imperial project continued after WWI. Parts of the defeated empires were parceled out either as quasi independent statelets or distributed among the victorious empires as colonies. The Russian Empire was reconstituted after much struggle and civil war as the Soviet Union, imperial and yet Soviet.

    Japan expanded its imperial reach into China after 1930 (they already had Korea), capturing and ruling Manchuria and consolidating rule over much of the rest of China. They’d previously taken and ruled Taiwan.

    The African continent continued to be ruled from London, Brussels, Lisbon, Paris and so on. The British Raj was under strain in India but continued to rule its colonial possessions throughout the world in its brutal and contemptuous fashion nonetheless. Italy conquered and declared its imperial rule over Ethiopia in 1936, having already declared its empire in Somaliland and Eritrea prior to WWI. Italy acquired Libya from the Ottomans c. 1912.

    I’d argue that it was partly the continuation of imperialism as a ruling concept that triggered WWII. Germany, stripped of its former empire by defeat in WWI certainly sought imperial conquests and rule under the Third Reich.

    As for the collapse of the imperial project following WWII, it’s hard to believe there was a great deal of planning involved. If there was, it was probably more malign than benign. Certainly there were public ideals expressed by some of the victors in WWII for self-determination, independence and commonwealth, but what actually took place as national liberation movements gained independence and the imperial project collapsed was hardly benign at all.We’re still experiencing the repercussions and even witnessing the so-far failed efforts of Anglo-Euro-American efforts to reimpose imperial rule wherever resistance arises. (cf the continuing catastrophes in the Middle East, North Africa, South Asia and so on.)

    China is an exceptional case. Its post WWII reunification under Mao and later economic resurgence seemed quite as unexpected to the ruling class as the later collapse of the Soviet Union. China in their minds was meant to be perpetually weak and poor, and a unified, wealthy, and arguably progressive (if not democratic) China never seemed possible — until it happened. But then much about China seems impossible until it happens.

    If the imperial project of the past had continued after WWII, it is likely that Mao and his revolution would not have succeeded, China would not have been allowed to reunify even under Chiang Kai Chek, and its various parts would have been distributed among favored warlords and clients of the victorious powers or kept fighting perpetual civil wars — to keep China poor and weak. India would not be independent. Nor would most of Africa or Southeast Asia and Indonesia.

    It would be a different world but one that many westerners would be familiar with and relatively comfortable with, regardless of what subject peoples think, feel or desire.

    And I wouldn’t be surprised if reversion to some variation of the imperial project is being planned and advocated right now. Not that it would be any better… or wiser.

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