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By Bilal Hafeez 04-07-2019

Demographics May Decide the U.S-China Rivalry (Axios, 3 min read)

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(You can read the article by clicking here) This piece reveals how with an aging and shrinking population, both the US and China may experience adverse long-term economic consequences, with the more severe implications in China as a consequence of their closed immigration position and earlier ‘one child’ policy. Despite the change in the latter policy to allow families in China to have up to two children and in rural regions even more, Chinese fertility still averaged just 1.18 between 2010 and 2018. Further data has also indicated that the working-age population in China has been shrinking since 2014, and an estimated one third of China’s population will be 60 years old by 2050. To cater for this, the Chinese Government will have to spend a large proportion of their fiscal budget on social welfare, pensions, and health care, instead of investments that may stimulate economic growth. As a solution, the China has already begun investing into industrial robots. Further policy changes, such as increasing the retirement age and relaxing border controls on migration could reduce the impact of the issue. This article is a particularly quick read, and is important for showing that China is not immune to the fiscal pressures that many developed countries are facing in terms of spiralling health costs.

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