1 00:00:00,080 --> 00:00:02,800 Speaker 1: One economists said, you know, John is probably best described 2 00:00:02,840 --> 00:00:08,240 Speaker 1: as an unruly teenager. I love that, and that's why 3 00:00:08,280 --> 00:00:10,119 Speaker 1: we're so busy, you know, everything from its market, the 4 00:00:10,119 --> 00:00:11,920 Speaker 1: treat of what's happening on the ground. It's a bit 5 00:00:11,960 --> 00:00:14,400 Speaker 1: like that teenager. There's just so much to keep an 6 00:00:14,440 --> 00:00:24,799 Speaker 1: eye on. Hello, and welcome back to Bloomberg Benchmark, a 7 00:00:24,840 --> 00:00:29,000 Speaker 1: podcast about the global economy. It is Thursday, February tenth. 8 00:00:29,200 --> 00:00:32,760 Speaker 1: I'm aki Ito, acting Tokyo Beer chief with Bloomberg News. 9 00:00:33,479 --> 00:00:36,919 Speaker 1: Tori and Dan sadly aren't going to be joining today. 10 00:00:37,520 --> 00:00:41,480 Speaker 1: Dan's traveling in Arizona right now, and Tori is being 11 00:00:41,479 --> 00:00:44,599 Speaker 1: the good global citizen that she is and volunteering for 12 00:00:44,640 --> 00:00:47,680 Speaker 1: the evening. But I have a very special guest with 13 00:00:47,760 --> 00:00:50,440 Speaker 1: me here and the current is on the line from 14 00:00:50,440 --> 00:00:54,360 Speaker 1: Hong Kong. Hi Enda, Hi, Hey, how's it going very well? 15 00:00:54,400 --> 00:00:59,000 Speaker 1: Thank you good? You know, and along with being the 16 00:00:59,080 --> 00:01:02,760 Speaker 1: nicest person I've ever talked to, who I've actually never 17 00:01:02,880 --> 00:01:09,880 Speaker 1: met in person, you're Bloomberg's chief Asia economics correspondent. Tell 18 00:01:09,920 --> 00:01:12,520 Speaker 1: us what you do every day? Well, actually, it's such 19 00:01:12,560 --> 00:01:14,800 Speaker 1: an exciting canvas here and you know, as you know 20 00:01:14,840 --> 00:01:17,200 Speaker 1: and our listeners know the Asian economy is changing before 21 00:01:17,240 --> 00:01:20,160 Speaker 1: our eyes, and there's so much going on, so much 22 00:01:20,240 --> 00:01:21,800 Speaker 1: changing that we're trying to get our head around and 23 00:01:21,800 --> 00:01:24,240 Speaker 1: to understand in terms of what it means for Asia, 24 00:01:24,720 --> 00:01:26,440 Speaker 1: what it means for the for the rest of the world, 25 00:01:26,480 --> 00:01:29,880 Speaker 1: of course, not least China. So my role involves everything 26 00:01:29,920 --> 00:01:33,479 Speaker 1: from news gathering and analysis through to editing and TV 27 00:01:33,680 --> 00:01:37,800 Speaker 1: and of course doing the Benchmark podcast. I love it well, 28 00:01:38,080 --> 00:01:39,520 Speaker 1: you know, and then we have you on the show 29 00:01:39,560 --> 00:01:42,640 Speaker 1: today because we're talking about China, which has you know, 30 00:01:42,760 --> 00:01:46,480 Speaker 1: just completely dominated the headlines since the beginning of the year, 31 00:01:47,000 --> 00:01:50,920 Speaker 1: and obviously that nervousness has spread throughout the world. I 32 00:01:50,960 --> 00:01:53,600 Speaker 1: think it's been a pretty hectic start of the year 33 00:01:53,640 --> 00:01:56,160 Speaker 1: for you, hasn't it. Yeah, it has, and at all 34 00:01:56,240 --> 00:01:59,320 Speaker 1: points to China, accum. You know, what's going on there 35 00:01:59,360 --> 00:02:03,520 Speaker 1: in the world second biggest economy is an unprecedented economic transformation, 36 00:02:03,960 --> 00:02:06,800 Speaker 1: the scale which we haven't seen before. And as China 37 00:02:06,920 --> 00:02:10,520 Speaker 1: grows and changes, the world will start feeling those growing pains. 38 00:02:10,560 --> 00:02:13,359 Speaker 1: And one economists said, you know, China is probably best 39 00:02:13,400 --> 00:02:19,200 Speaker 1: described as an unruly teenager. I love that, and that's 40 00:02:19,200 --> 00:02:21,120 Speaker 1: why we're so busy, you know, everything from its market, 41 00:02:21,160 --> 00:02:23,200 Speaker 1: the treat of what's happening underground. It's a bit like 42 00:02:23,240 --> 00:02:25,800 Speaker 1: that teenager. There's just so much to keep an eye on. 43 00:02:26,080 --> 00:02:28,840 Speaker 1: I love it. Well. I guess beyond those, you know, 44 00:02:28,880 --> 00:02:32,640 Speaker 1: immediate emergencies that we're seeing in the day to day headlines, 45 00:02:33,160 --> 00:02:36,760 Speaker 1: there's kind of this longer run crisis that's simmering below 46 00:02:36,760 --> 00:02:41,120 Speaker 1: the surface. And that crisis is China's rapidly Asian population 47 00:02:41,720 --> 00:02:44,320 Speaker 1: and what's already a shrinking workforce. And I think this 48 00:02:44,440 --> 00:02:46,440 Speaker 1: is something that you talk about all the time, and 49 00:02:46,919 --> 00:02:50,760 Speaker 1: it's a crisis that other countries, I guess have entered. First. Japan, 50 00:02:51,200 --> 00:02:53,840 Speaker 1: where I am right now, is a really good example 51 00:02:53,919 --> 00:02:57,320 Speaker 1: of a country that's grappling with all these consequences in 52 00:02:57,400 --> 00:03:00,960 Speaker 1: real time right now. But China's going to be there 53 00:03:01,000 --> 00:03:04,480 Speaker 1: pretty soon over the next few decades. So and should 54 00:03:04,520 --> 00:03:06,520 Speaker 1: we go through some of the key numbers first to 55 00:03:06,560 --> 00:03:10,320 Speaker 1: set the stage. Sure, yeah, I guess you know, we 56 00:03:10,320 --> 00:03:14,400 Speaker 1: can start with the population. So China's currently home to 57 00:03:15,320 --> 00:03:19,359 Speaker 1: one point three eight billion people, which makes it the 58 00:03:19,400 --> 00:03:22,840 Speaker 1: world's biggest country by population. But I read that this 59 00:03:22,880 --> 00:03:26,400 Speaker 1: isn't for long. That India is going to overtake China 60 00:03:26,639 --> 00:03:31,160 Speaker 1: in the early twenties. Gosh, and if that happens, would 61 00:03:31,280 --> 00:03:35,400 Speaker 1: China no longer be the world's largest country for like 62 00:03:35,480 --> 00:03:38,480 Speaker 1: the first time in history. Well, that's that's what the 63 00:03:38,480 --> 00:03:42,280 Speaker 1: indications are at a moment. Ay, Yeah, that's amazing. And 64 00:03:42,320 --> 00:03:46,040 Speaker 1: I guess it's working age population already started shrinking in 65 00:03:47,560 --> 00:03:50,080 Speaker 1: And I laughed when you talked about China being a 66 00:03:50,120 --> 00:03:53,520 Speaker 1: teenager right now, because you know, the media and Asian 67 00:03:53,720 --> 00:03:57,880 Speaker 1: ninety was twenty two years old, and right now the 68 00:03:57,920 --> 00:04:01,160 Speaker 1: median age is thirty seven, so maybe a little older 69 00:04:01,160 --> 00:04:05,640 Speaker 1: than a teenager. But by twenty fifty, the median age 70 00:04:05,800 --> 00:04:09,680 Speaker 1: is going to be fifty years old, so solidly middle aged. 71 00:04:10,040 --> 00:04:12,880 Speaker 1: And this is really interesting. By then, the average person 72 00:04:12,920 --> 00:04:16,240 Speaker 1: in China is going to be actually much older than 73 00:04:16,279 --> 00:04:19,920 Speaker 1: the average person in the US, in Canada, the UK, 74 00:04:20,400 --> 00:04:24,160 Speaker 1: all of Skandinavia and a lot of other developed economies. 75 00:04:25,560 --> 00:04:27,560 Speaker 1: H Well, look, maybe China is on course for a 76 00:04:27,600 --> 00:04:32,120 Speaker 1: midlife crisis. You know, this all comes back to the 77 00:04:32,200 --> 00:04:34,960 Speaker 1: fertility rate AKA, which at the moment is one point 78 00:04:35,000 --> 00:04:36,920 Speaker 1: five five. That's one of the lowest in the world, 79 00:04:37,200 --> 00:04:39,320 Speaker 1: and that's well below the rate that you need to 80 00:04:39,360 --> 00:04:43,400 Speaker 1: maintain a content population, right, So, and I guess behind 81 00:04:43,480 --> 00:04:46,360 Speaker 1: all of this is one of the biggest social experiments 82 00:04:46,360 --> 00:04:51,000 Speaker 1: in history, which was China's one child policy that became 83 00:04:51,160 --> 00:04:54,520 Speaker 1: a two child policy last year. Can you talk about 84 00:04:54,600 --> 00:04:58,280 Speaker 1: how these policies came about? Sure, Look, obviously, Key, it's 85 00:04:58,320 --> 00:05:00,960 Speaker 1: a very sensitive and difficult topic in China, and it's 86 00:05:00,960 --> 00:05:02,920 Speaker 1: also very personal one for all the people who have 87 00:05:02,960 --> 00:05:05,080 Speaker 1: been impacted by it, and you could see that from 88 00:05:05,120 --> 00:05:08,240 Speaker 1: the outpouring of emotion when China dropped the one child 89 00:05:08,240 --> 00:05:11,200 Speaker 1: policy late last year and went for the two child policy. 90 00:05:11,400 --> 00:05:14,680 Speaker 1: As you say, it all began the late nineteen seventies 91 00:05:15,160 --> 00:05:17,200 Speaker 1: and has been very to describe as one of the 92 00:05:17,240 --> 00:05:20,360 Speaker 1: most ambitious demographic experiments that the world has ever seen. 93 00:05:21,560 --> 00:05:25,800 Speaker 1: Partly it started because in nineteen seventy nine, Thankoping was 94 00:05:25,839 --> 00:05:28,359 Speaker 1: worried about the writing population in China and he was 95 00:05:28,440 --> 00:05:31,560 Speaker 1: worried about what impact of writing population would have on 96 00:05:31,600 --> 00:05:34,760 Speaker 1: the nation's scarce resources. They thought the best thing to 97 00:05:34,760 --> 00:05:38,360 Speaker 1: do would be to limit population growth, and the thinking 98 00:05:38,520 --> 00:05:40,159 Speaker 1: was that way there would be enough to go around 99 00:05:40,240 --> 00:05:43,680 Speaker 1: for everybody. But of course, ultimately that policy is only 100 00:05:43,760 --> 00:05:47,520 Speaker 1: undermined the growth and the working age population shrank last 101 00:05:47,600 --> 00:05:49,840 Speaker 1: year for the first time in two decades, and now 102 00:05:49,880 --> 00:05:53,719 Speaker 1: we're about to see the cohort of senior citizens grow rapidly. 103 00:05:53,920 --> 00:05:56,240 Speaker 1: So that's what the net result has been of China's 104 00:05:56,240 --> 00:06:01,040 Speaker 1: one child policy. Right, And to confirm China only allows 105 00:06:01,160 --> 00:06:04,640 Speaker 1: parents to have two children. Right, It's not like there's 106 00:06:04,680 --> 00:06:07,880 Speaker 1: been a lift on all restrictions altogether. Now, there has 107 00:06:07,920 --> 00:06:10,080 Speaker 1: been a gradual easing of the one child policy over 108 00:06:10,120 --> 00:06:13,440 Speaker 1: recent years, but it officially came to an end last 109 00:06:13,520 --> 00:06:15,799 Speaker 1: year as the new five year Plan has been developed 110 00:06:15,800 --> 00:06:19,719 Speaker 1: and now formally a two child policy. I guess we 111 00:06:19,720 --> 00:06:23,960 Speaker 1: should talk about why economists are worried about this demographic 112 00:06:24,000 --> 00:06:28,159 Speaker 1: trend of uh an Asian and shrinking working age population. 113 00:06:28,600 --> 00:06:31,000 Speaker 1: Do you want to walk us through that? Sure? Well, look, 114 00:06:31,440 --> 00:06:35,040 Speaker 1: it's important actually because when you fear people in the workforce, 115 00:06:35,160 --> 00:06:37,440 Speaker 1: you have few people to grow the economy, and you 116 00:06:37,480 --> 00:06:40,360 Speaker 1: have fewer people spending. And you know what, an aging 117 00:06:40,400 --> 00:06:43,480 Speaker 1: society is actually pretty expensive. And I think before I 118 00:06:43,560 --> 00:06:45,480 Speaker 1: came on, I just looked up some more bank numbers 119 00:06:45,480 --> 00:06:46,880 Speaker 1: and it might be worked having a look at some 120 00:06:46,880 --> 00:06:49,400 Speaker 1: of these World Bank numbers to understand the gravity of 121 00:06:49,440 --> 00:06:51,960 Speaker 1: the issue in China. These are the figures that struck 122 00:06:52,000 --> 00:06:55,000 Speaker 1: me the number of babies promited as a result of 123 00:06:55,040 --> 00:06:58,039 Speaker 1: the policy. So we went from twelve point one per 124 00:06:58,120 --> 00:07:03,239 Speaker 1: one thousand people in and that was from a post 125 00:07:03,279 --> 00:07:05,919 Speaker 1: reform peak of twenty three point three in the in 126 00:07:05,960 --> 00:07:09,640 Speaker 1: the late nineteen eighties, and so that's effectively that's effectively 127 00:07:09,680 --> 00:07:13,080 Speaker 1: half and it's below the US rate of about thirteen. 128 00:07:13,560 --> 00:07:16,960 Speaker 1: Malaysia has eighteen and Vietnam has um has the sixteen, 129 00:07:17,160 --> 00:07:20,320 Speaker 1: So that kind of gives an indication of the scale 130 00:07:20,320 --> 00:07:22,360 Speaker 1: of the problem they have on on the birth rate. 131 00:07:22,680 --> 00:07:25,400 Speaker 1: But of course we know that China also has on 132 00:07:25,440 --> 00:07:27,400 Speaker 1: the other side of the ledger might be hard to 133 00:07:27,400 --> 00:07:29,000 Speaker 1: believe for other parts of the world, but they have 134 00:07:29,200 --> 00:07:33,360 Speaker 1: rising wages and labor shortage in some areas, so they're 135 00:07:33,400 --> 00:07:39,120 Speaker 1: already losing out a competitiveness because of of shortage labor force. 136 00:07:39,200 --> 00:07:41,800 Speaker 1: And when you throw an aging population an aging workforce 137 00:07:41,800 --> 00:07:44,800 Speaker 1: into the mix, this demographic challenge is really not a 138 00:07:44,880 --> 00:07:48,200 Speaker 1: challenge of China needs right now, right right and and 139 00:07:48,240 --> 00:07:51,040 Speaker 1: one thing you know we've definitely seen here in Japan 140 00:07:51,280 --> 00:07:55,280 Speaker 1: is just a budget that's stretched to the complete max 141 00:07:55,800 --> 00:07:59,080 Speaker 1: um to be able to pay for these fewer adults 142 00:07:59,280 --> 00:08:03,440 Speaker 1: working to support the growing number of retirees. What's China's 143 00:08:03,480 --> 00:08:06,000 Speaker 1: government debt situation like right now, do you think it's 144 00:08:06,000 --> 00:08:09,400 Speaker 1: going to be able to take it? Well? Okay, so sure. 145 00:08:09,520 --> 00:08:12,920 Speaker 1: Physically China is probably in a stronger position than Japan. 146 00:08:13,040 --> 00:08:16,400 Speaker 1: It's central government that is quite low. But the overall 147 00:08:16,720 --> 00:08:19,000 Speaker 1: and I should say that the savings right the household 148 00:08:19,000 --> 00:08:21,840 Speaker 1: savings rate is relatively high, but you know, the overall 149 00:08:21,880 --> 00:08:25,600 Speaker 1: economy is under quite a lot of debt right now, 150 00:08:25,720 --> 00:08:28,560 Speaker 1: both a corporate level and state on enterprise level and 151 00:08:28,600 --> 00:08:31,120 Speaker 1: the local government level. So it's not like, you know, 152 00:08:31,280 --> 00:08:34,160 Speaker 1: China is altogether swimming in money that they can unleash 153 00:08:34,400 --> 00:08:37,679 Speaker 1: and give their retirees a kind of a golden lifestyle. 154 00:08:38,040 --> 00:08:40,400 Speaker 1: But I think I think the problem is that ultimately 155 00:08:40,480 --> 00:08:43,439 Speaker 1: an aging population will cost money, and that will cost 156 00:08:43,600 --> 00:08:46,640 Speaker 1: China money, and that will boost healthcare costs and put 157 00:08:46,720 --> 00:08:49,240 Speaker 1: bigger burdens on the younger people and on the young 158 00:08:49,280 --> 00:08:52,559 Speaker 1: families in China to support their their lrelis now, the 159 00:08:52,640 --> 00:08:56,440 Speaker 1: United Nations projected the number of Chinese people age sixty 160 00:08:56,480 --> 00:08:59,400 Speaker 1: and older with more than double in the next twenty 161 00:08:59,480 --> 00:09:04,240 Speaker 1: five years, four and one million by that group share 162 00:09:04,280 --> 00:09:10,480 Speaker 1: of the population will be around up from around last year. 163 00:09:10,880 --> 00:09:13,920 Speaker 1: So just think about the costs associated with that, and 164 00:09:14,440 --> 00:09:17,160 Speaker 1: with an aging society, with the various illness and disease 165 00:09:17,160 --> 00:09:19,600 Speaker 1: that's associated with it, and the burden that puts on 166 00:09:19,679 --> 00:09:23,360 Speaker 1: young people. That's that's something of a taking time right, right, 167 00:09:23,760 --> 00:09:28,760 Speaker 1: And how old are you right now? Okay, so you're 168 00:09:28,800 --> 00:09:30,920 Speaker 1: totally young, so I can say this in front of you. 169 00:09:31,080 --> 00:09:34,559 Speaker 1: But there's also you know, just that an older population 170 00:09:34,720 --> 00:09:38,160 Speaker 1: leads to a less dynamic economy. It's one of the 171 00:09:38,200 --> 00:09:41,320 Speaker 1: reasons why I love living in San Francisco, in the 172 00:09:41,320 --> 00:09:43,920 Speaker 1: San Francisco Bay Area, which is just full of so 173 00:09:43,960 --> 00:09:47,640 Speaker 1: many young people, you know, throwing out these crazy ideas. 174 00:09:48,080 --> 00:09:50,240 Speaker 1: Most of them are terrible, most of them are going 175 00:09:50,280 --> 00:09:53,280 Speaker 1: to fail, but occasionally, you know that one crazy idea 176 00:09:53,280 --> 00:09:55,960 Speaker 1: of sticks and changes the world, and you can't really 177 00:09:56,000 --> 00:10:00,240 Speaker 1: imagine happening that a lot in a country with so 178 00:10:00,320 --> 00:10:05,240 Speaker 1: many older people. That's right, I mean, look, innovation at 179 00:10:05,240 --> 00:10:08,000 Speaker 1: its core needs to be driven by ideas, by energy, 180 00:10:08,000 --> 00:10:11,199 Speaker 1: by enthusiasm, and a lot of that is generated by 181 00:10:11,320 --> 00:10:14,160 Speaker 1: you know, young people behind young startups coming out of 182 00:10:14,280 --> 00:10:18,360 Speaker 1: universities and bustling with energy and full of ideas. We 183 00:10:18,440 --> 00:10:20,360 Speaker 1: only have to look at Japan. Japan is still, of 184 00:10:20,400 --> 00:10:23,599 Speaker 1: course a global center for research and development and innovation, 185 00:10:24,800 --> 00:10:27,040 Speaker 1: but you know, it's also slipped behind the curve a bit. 186 00:10:27,080 --> 00:10:31,800 Speaker 1: It's the smartphone generation pretty much passed by Japan. It was, 187 00:10:31,840 --> 00:10:34,760 Speaker 1: of course the home of home entertainment at one point, 188 00:10:34,760 --> 00:10:37,400 Speaker 1: but the smartphone era has passed by, so to speak. 189 00:10:37,600 --> 00:10:39,640 Speaker 1: And you can see how the lives of Korea and 190 00:10:39,720 --> 00:10:43,360 Speaker 1: China are doing more innovation front. But ultimately, when you 191 00:10:43,400 --> 00:10:45,600 Speaker 1: have a declining birth rate and when you have an 192 00:10:45,600 --> 00:10:48,960 Speaker 1: aging population, that will act as a break on on 193 00:10:49,040 --> 00:10:51,520 Speaker 1: the workforce, that will limit the amount of talent that 194 00:10:51,800 --> 00:10:54,240 Speaker 1: in that workforce, and that will fee you through towards 195 00:10:54,240 --> 00:10:56,679 Speaker 1: trying to contribute on on the global stage. And I 196 00:10:56,720 --> 00:11:00,400 Speaker 1: think that's definitely consideration. And then we just aked about 197 00:11:00,440 --> 00:11:04,120 Speaker 1: all these broad forces. But in terms of numbers, what 198 00:11:04,360 --> 00:11:07,160 Speaker 1: is China's economic growth going to look like in the 199 00:11:07,240 --> 00:11:11,240 Speaker 1: future from the current piece of about seven percent growth 200 00:11:11,320 --> 00:11:16,840 Speaker 1: per year? Yeah, okay, So China grew in fifteen at 201 00:11:17,000 --> 00:11:20,560 Speaker 1: six point nine percent for the year. That was, on paper, 202 00:11:20,600 --> 00:11:23,319 Speaker 1: its lowest pace of growth in the quarter of a century. 203 00:11:23,920 --> 00:11:26,520 Speaker 1: Lots of economists are skeptical about the data and will 204 00:11:26,600 --> 00:11:29,640 Speaker 1: question the numbers, but you know, either way, take it 205 00:11:29,640 --> 00:11:32,480 Speaker 1: to China grew somewhere above six percent percent last year, 206 00:11:32,480 --> 00:11:35,280 Speaker 1: and when you consider the size of that economy and 207 00:11:35,440 --> 00:11:39,120 Speaker 1: relative to its peers, probably not a bad performance, some 208 00:11:39,200 --> 00:11:41,920 Speaker 1: would say. But going forward, as we mentioned at the 209 00:11:41,960 --> 00:11:45,239 Speaker 1: start of the show, China is undergoing this big transformation 210 00:11:45,360 --> 00:11:47,160 Speaker 1: right now, and they want to move away from an 211 00:11:47,160 --> 00:11:51,319 Speaker 1: economy that's really fueled by by death funded heavy industry 212 00:11:51,400 --> 00:11:54,120 Speaker 1: and one that's really belonged in exports, the one that's 213 00:11:54,160 --> 00:11:57,520 Speaker 1: driven much more by internal demands. So they want consumers 214 00:11:57,559 --> 00:11:59,679 Speaker 1: spending money on the high street and they want a 215 00:11:59,800 --> 00:12:02,600 Speaker 1: row ring services industry. Now, so what does that mean. 216 00:12:02,920 --> 00:12:05,559 Speaker 1: It means the growth rate will probably be lower and 217 00:12:06,040 --> 00:12:09,160 Speaker 1: at the NPC, which is ongoing in Beijing right now, 218 00:12:10,000 --> 00:12:12,040 Speaker 1: the policy makers have come up with a new range. 219 00:12:12,200 --> 00:12:14,440 Speaker 1: Rather than a hard target, they're now talking about a 220 00:12:14,559 --> 00:12:18,400 Speaker 1: range of between six and a half and seven heading 221 00:12:18,400 --> 00:12:20,920 Speaker 1: out over the next five years. Of course, that does 222 00:12:20,960 --> 00:12:23,520 Speaker 1: give them riggle room, and you know, it doesn't give 223 00:12:23,559 --> 00:12:25,920 Speaker 1: them a hard target that they will be scolded for missing. 224 00:12:26,000 --> 00:12:28,960 Speaker 1: On the other hand, it's still a pretty ambitious target 225 00:12:29,120 --> 00:12:31,480 Speaker 1: when you compare to both hit the emerging market appears 226 00:12:31,520 --> 00:12:34,120 Speaker 1: and obviously the developed world, So that means there's still 227 00:12:34,120 --> 00:12:37,520 Speaker 1: a burden on China to hit that growth target, and 228 00:12:37,559 --> 00:12:40,240 Speaker 1: that means they may need to rely on some of 229 00:12:40,280 --> 00:12:43,640 Speaker 1: the old playbooks to sugar hit the growth. Spend more, 230 00:12:44,160 --> 00:12:46,560 Speaker 1: borrow and more and then everybody. That will lead to 231 00:12:47,040 --> 00:12:49,800 Speaker 1: perhaps reform being pushed to one side at the expense 232 00:12:49,840 --> 00:12:51,679 Speaker 1: of growth in the near term. And that's the real 233 00:12:51,800 --> 00:12:54,760 Speaker 1: balancing act, that's the real juggle, that's the backdrop that's 234 00:12:54,760 --> 00:12:58,400 Speaker 1: going on in China's economy right now, Aki, right, right, 235 00:12:58,600 --> 00:13:01,600 Speaker 1: And when you think of that the potential growth way 236 00:13:01,800 --> 00:13:05,360 Speaker 1: like the speed limit of China's economy. Surely that's not 237 00:13:05,360 --> 00:13:07,920 Speaker 1: going to be seven in a decade or two, right, 238 00:13:08,120 --> 00:13:11,200 Speaker 1: That number has to come down. Yeah, I think that's 239 00:13:11,240 --> 00:13:13,679 Speaker 1: the that's the feeling here that the number will gradually 240 00:13:13,679 --> 00:13:15,280 Speaker 1: start to come down. And when you consider this new 241 00:13:15,400 --> 00:13:18,079 Speaker 1: range of six and a half or seven, one interplation 242 00:13:18,240 --> 00:13:20,400 Speaker 1: is you know, actually that gives them quite a bit 243 00:13:20,400 --> 00:13:22,720 Speaker 1: of regular room because as we're moving to the latter 244 00:13:22,800 --> 00:13:25,240 Speaker 1: stages of the five year plan, the new five year 245 00:13:25,240 --> 00:13:27,760 Speaker 1: plan that starts, and you know, maybe they can go 246 00:13:27,840 --> 00:13:29,880 Speaker 1: below six and a half, but I think the bigger 247 00:13:29,920 --> 00:13:31,920 Speaker 1: point actually, even if they do go below six and 248 00:13:31,960 --> 00:13:33,440 Speaker 1: a half, even if it does go down to six 249 00:13:33,440 --> 00:13:38,360 Speaker 1: and lower, it's about sustainable growth for China's economy, and 250 00:13:38,400 --> 00:13:40,960 Speaker 1: I think I think both China and the world would 251 00:13:41,040 --> 00:13:45,240 Speaker 1: welcome that kind of growth rather than the unsustainable breakneck 252 00:13:45,320 --> 00:13:48,280 Speaker 1: pace we witnessed. Will say, you know over the last 253 00:13:48,280 --> 00:13:51,160 Speaker 1: decade when I grew double digit pace, but ultimately left 254 00:13:51,160 --> 00:13:53,920 Speaker 1: the hangover of a huge debt mountain and a lot 255 00:13:53,960 --> 00:13:55,840 Speaker 1: of problems in the economy that that they're still trying 256 00:13:55,840 --> 00:13:57,520 Speaker 1: to deal with. And then we only have to look 257 00:13:57,520 --> 00:14:00,199 Speaker 1: to Japan what happened in the nineteen eighties when the 258 00:14:00,240 --> 00:14:04,479 Speaker 1: bubble eventually burst. It still hasn't fully recovered. Speaking of sustainability, 259 00:14:04,520 --> 00:14:07,920 Speaker 1: one of the interesting things I think is Asian so 260 00:14:08,040 --> 00:14:12,200 Speaker 1: far in the world has been a phenomenon mostly just 261 00:14:12,320 --> 00:14:15,480 Speaker 1: for rich society's right that you know, rich societies that 262 00:14:15,559 --> 00:14:19,360 Speaker 1: already have this established infrastructure to care for a greater 263 00:14:19,480 --> 00:14:23,000 Speaker 1: number of old people. But China is still making that 264 00:14:23,200 --> 00:14:27,040 Speaker 1: transition right now from a developing two developed economy like 265 00:14:27,360 --> 00:14:30,080 Speaker 1: that economists you were talking about was saying, you know, 266 00:14:30,080 --> 00:14:33,000 Speaker 1: it's kind of this teenager trying to mature into an adult. 267 00:14:33,120 --> 00:14:36,360 Speaker 1: So do you think China is ready for this future 268 00:14:36,480 --> 00:14:39,440 Speaker 1: of lots of old people. No, it's not. It's important 269 00:14:39,480 --> 00:14:42,560 Speaker 1: to remember that China is still a developing nation. Aki. 270 00:14:43,480 --> 00:14:45,480 Speaker 1: Last week, I was in meeting with someone who was 271 00:14:45,680 --> 00:14:50,240 Speaker 1: recounting to their experience of a hospital in rural China, 272 00:14:50,720 --> 00:14:55,320 Speaker 1: and they recounted the hygiene standards, the facility that weren't 273 00:14:55,320 --> 00:14:58,960 Speaker 1: offer and the condition of equipment in this hospital, and 274 00:14:59,040 --> 00:15:01,280 Speaker 1: the point of discourse was a kind of a vivid 275 00:15:01,360 --> 00:15:05,960 Speaker 1: reminder that vast parts of China are still very much developing. Moreland, 276 00:15:06,000 --> 00:15:09,240 Speaker 1: when you move away from the fast growing eastern coastal 277 00:15:09,400 --> 00:15:12,360 Speaker 1: regions and the big financial hub like Shanghai and of 278 00:15:12,400 --> 00:15:15,640 Speaker 1: course the global capital and is Beijing, there's still a 279 00:15:15,680 --> 00:15:18,160 Speaker 1: long way to go in terms of catching up with 280 00:15:18,600 --> 00:15:21,760 Speaker 1: the wealth of the developed world in rural China. And 281 00:15:21,840 --> 00:15:25,760 Speaker 1: that raises the question about how will these elderly people 282 00:15:25,840 --> 00:15:28,560 Speaker 1: cope in the country side as they go forward with 283 00:15:28,840 --> 00:15:31,160 Speaker 1: on an already small family to support them. And of 284 00:15:31,200 --> 00:15:33,960 Speaker 1: course that brings up the question of of migration. As 285 00:15:33,960 --> 00:15:37,440 Speaker 1: you know, and there's considerable migration in Shana in terms 286 00:15:37,440 --> 00:15:39,720 Speaker 1: of those leaving wanting to leave the rural area and 287 00:15:39,760 --> 00:15:42,400 Speaker 1: move towards the urban centers. I mean that works up 288 00:15:42,440 --> 00:15:45,720 Speaker 1: to a point, but it leaves behind a society that's 289 00:15:45,800 --> 00:15:48,920 Speaker 1: quite isolated, and of course it lacks the resources and 290 00:15:49,040 --> 00:15:51,480 Speaker 1: lacks of funding to have the facilities that are needed 291 00:15:51,800 --> 00:15:55,040 Speaker 1: on the healthcare side of things, and and and social care. 292 00:15:55,120 --> 00:15:57,920 Speaker 1: So I think that's probably a genuine cause for concern, 293 00:15:58,040 --> 00:16:02,240 Speaker 1: and that China's healthcare isn't yet anything like on the 294 00:16:02,280 --> 00:16:04,600 Speaker 1: scale that we would appreciate it in the in the 295 00:16:04,640 --> 00:16:08,680 Speaker 1: developed world, and it's still quite imbalanced within China itself. Well, 296 00:16:09,360 --> 00:16:13,160 Speaker 1: you know, in my completely immature opinion, I feel like 297 00:16:13,200 --> 00:16:16,880 Speaker 1: all of these problems were completely foreseeable from decades ago. 298 00:16:17,040 --> 00:16:20,280 Speaker 1: So why do you think it took policy makers so 299 00:16:20,320 --> 00:16:23,240 Speaker 1: long to scrap the one child policy? And and why 300 00:16:23,240 --> 00:16:26,600 Speaker 1: do why does the government have restrictions on the number 301 00:16:26,600 --> 00:16:29,880 Speaker 1: of children parents can have all together? Well, so, you know, 302 00:16:29,960 --> 00:16:32,920 Speaker 1: this is a very motive and difficult issue in in China, 303 00:16:33,000 --> 00:16:36,080 Speaker 1: and the thinking behind it at the time was China 304 00:16:36,120 --> 00:16:38,240 Speaker 1: would not be able to cope, that the nation would 305 00:16:38,240 --> 00:16:41,640 Speaker 1: not be able to feed itself, and if the population 306 00:16:41,800 --> 00:16:43,680 Speaker 1: continue to grow at the pace that it was growing 307 00:16:43,720 --> 00:16:46,080 Speaker 1: back in the late seventies when this policy was introduced. 308 00:16:46,120 --> 00:16:49,240 Speaker 1: And remember food security is a big issue for China. 309 00:16:49,560 --> 00:16:53,120 Speaker 1: They really try to promote an idea of self reliance, 310 00:16:53,400 --> 00:16:56,960 Speaker 1: and that's why they're moving around the world right now, 311 00:16:57,040 --> 00:16:59,800 Speaker 1: buying all kinds of assets in the in the agriculture 312 00:17:00,000 --> 00:17:02,400 Speaker 1: world to make sure that China can be fed and 313 00:17:02,480 --> 00:17:05,200 Speaker 1: that they have the technological know how to grow crops 314 00:17:05,200 --> 00:17:08,719 Speaker 1: and to transform their farms. And I think that's one 315 00:17:08,760 --> 00:17:10,720 Speaker 1: of the reasons why they were still looking to change 316 00:17:10,760 --> 00:17:15,680 Speaker 1: the policy, because they were convinced that the population was 317 00:17:15,680 --> 00:17:18,960 Speaker 1: was unsustainable the size of it. They weren't appreciative of 318 00:17:19,119 --> 00:17:21,359 Speaker 1: the impact it would They weren't appreciative of the impact 319 00:17:21,359 --> 00:17:24,359 Speaker 1: it would usibly have on economic growth and on their workforce. 320 00:17:24,440 --> 00:17:26,720 Speaker 1: And you know, they've now ended up in a situation 321 00:17:26,760 --> 00:17:29,920 Speaker 1: where you have declining birth rate That ultimately means you've 322 00:17:29,920 --> 00:17:33,560 Speaker 1: got a smaller population from which to draw workers, and 323 00:17:33,600 --> 00:17:36,920 Speaker 1: that's going to hold back growth and in some places 324 00:17:36,960 --> 00:17:40,040 Speaker 1: it's going to is driving up wages too quickly and 325 00:17:40,160 --> 00:17:43,680 Speaker 1: moving causing factories to move out of China into cheaper 326 00:17:43,960 --> 00:17:46,920 Speaker 1: locations in saut these ages. So I think you can 327 00:17:46,960 --> 00:17:50,000 Speaker 1: consider the policy mistake, and yes, it took far too 328 00:17:50,040 --> 00:17:53,879 Speaker 1: long for Chinese leadership to realize the error of their ways. Yeah, 329 00:17:53,960 --> 00:17:56,240 Speaker 1: that's quite the dilemma though, you don't you don't want 330 00:17:56,680 --> 00:17:59,920 Speaker 1: growing population, but you don't want a shrinking population either. 331 00:18:00,080 --> 00:18:03,720 Speaker 1: I would not want to be a Chinese policymaker right now, 332 00:18:04,080 --> 00:18:05,920 Speaker 1: you know. And then maybe we should have titled this 333 00:18:06,040 --> 00:18:11,280 Speaker 1: episode China and Japan because we talk about Japan so much. 334 00:18:11,320 --> 00:18:14,280 Speaker 1: But you know, being a Japanese person, having grown up 335 00:18:14,280 --> 00:18:17,720 Speaker 1: here and also living here right now, Japan just seems 336 00:18:17,720 --> 00:18:21,040 Speaker 1: like such a cautionary tale for China. I wasn't alive 337 00:18:21,119 --> 00:18:24,480 Speaker 1: back then, but thirty five years ago there were apparently 338 00:18:24,560 --> 00:18:28,080 Speaker 1: tons of people already talking about Japan's soon to rapidly 339 00:18:28,119 --> 00:18:31,199 Speaker 1: age population, you know, and no one really did anything 340 00:18:31,240 --> 00:18:34,040 Speaker 1: about it until it got to where it is today, 341 00:18:34,119 --> 00:18:37,680 Speaker 1: which is a very bad situation. So do you think 342 00:18:37,760 --> 00:18:41,720 Speaker 1: China is ultimately going to end up like Japan or 343 00:18:41,800 --> 00:18:44,280 Speaker 1: do you think policymakers are going to be able to 344 00:18:44,280 --> 00:18:47,159 Speaker 1: do something about it? Because it seems like one of 345 00:18:47,200 --> 00:18:51,919 Speaker 1: the benefits of having a centrally planned government is that 346 00:18:51,960 --> 00:18:54,520 Speaker 1: you can actually think about the long term instead of 347 00:18:54,560 --> 00:18:58,600 Speaker 1: this messy short term nous that I think we're seeing 348 00:18:58,640 --> 00:19:01,040 Speaker 1: in the US presidential probably marries right now where you 349 00:19:01,119 --> 00:19:04,800 Speaker 1: just have to chase the immediate vote. Yeah, I think, 350 00:19:05,119 --> 00:19:07,080 Speaker 1: you know, in the case for the defense. For China, 351 00:19:07,160 --> 00:19:11,679 Speaker 1: I think, um, they have made significant economic progress, I 352 00:19:11,720 --> 00:19:15,480 Speaker 1: mean quite dramatic economic progress over the three decades since 353 00:19:15,480 --> 00:19:18,119 Speaker 1: they started to to open up to the outside the world. 354 00:19:18,520 --> 00:19:21,879 Speaker 1: They have lifted you know, hundreds of millions of people 355 00:19:21,960 --> 00:19:25,119 Speaker 1: out of poverty. And when you compare their records on 356 00:19:25,160 --> 00:19:28,680 Speaker 1: probably eradication to say other developing nations, I think China 357 00:19:28,760 --> 00:19:31,960 Speaker 1: probably deserves a bit of a strong tick for its 358 00:19:31,960 --> 00:19:35,120 Speaker 1: efforts there. But at the same time, it's now facing 359 00:19:35,119 --> 00:19:37,040 Speaker 1: some of the same problems. Like you mentioned that some 360 00:19:37,119 --> 00:19:39,360 Speaker 1: of its trading rivals rates, and one of the worries 361 00:19:39,480 --> 00:19:43,080 Speaker 1: in China is that maybe lifting this one child policy 362 00:19:43,080 --> 00:19:45,480 Speaker 1: and moving to the two channel policy is too little, 363 00:19:45,880 --> 00:19:50,400 Speaker 1: too late, because attitudes have changed in recent years. One 364 00:19:50,440 --> 00:19:56,080 Speaker 1: of the phenomenon's noticed in China is that in the 365 00:19:56,200 --> 00:20:00,280 Speaker 1: urbanization of China means that many couples aren't in interested 366 00:20:00,320 --> 00:20:04,160 Speaker 1: in having a second child because of the costs associated 367 00:20:04,200 --> 00:20:06,040 Speaker 1: with having a second child or indeed you know, a 368 00:20:06,040 --> 00:20:10,040 Speaker 1: bigger family that's everything from healthcare to education costs, to 369 00:20:10,240 --> 00:20:12,639 Speaker 1: general costs of living, and as the feeling now that 370 00:20:13,640 --> 00:20:16,199 Speaker 1: the organization of China has reached such a such an 371 00:20:16,200 --> 00:20:20,359 Speaker 1: extent that even with the government encouraging and introducing this 372 00:20:20,640 --> 00:20:23,600 Speaker 1: to child policy, it may not be enough to turn 373 00:20:23,640 --> 00:20:25,680 Speaker 1: the tide. That's going to be the big test for China, 374 00:20:25,680 --> 00:20:27,159 Speaker 1: and that will put the onus on them. If they 375 00:20:27,200 --> 00:20:29,560 Speaker 1: really want to learn from Japan's mistakes, They're going to 376 00:20:29,640 --> 00:20:32,680 Speaker 1: have to do a lot more in terms of you know, 377 00:20:32,800 --> 00:20:37,760 Speaker 1: the maternity care, maternity leave, and paternity leave for parents. 378 00:20:37,800 --> 00:20:39,040 Speaker 1: Are going to have to make sure all of these 379 00:20:39,040 --> 00:20:42,120 Speaker 1: facilities are put in place that allow couples to continue 380 00:20:42,160 --> 00:20:44,840 Speaker 1: their careers and to stay in the workforce. And I 381 00:20:44,880 --> 00:20:47,800 Speaker 1: think in terms of those structural forms, those are lessons 382 00:20:47,800 --> 00:20:50,000 Speaker 1: they can learn from Japan and the mistakes that are 383 00:20:50,000 --> 00:20:54,560 Speaker 1: made there too. Yeah, definitely. So maybe as our last 384 00:20:54,640 --> 00:20:57,919 Speaker 1: question here, and I'll ask the hardest question that we 385 00:20:58,080 --> 00:21:02,399 Speaker 1: are listed in our brainstorms shin. Right now, by twenty one, 386 00:21:03,000 --> 00:21:07,080 Speaker 1: the world is projected to be twelve years older than 387 00:21:07,119 --> 00:21:11,439 Speaker 1: it is today. So the entire world is currently in 388 00:21:11,480 --> 00:21:16,119 Speaker 1: the process of Asian of maturing, although the world average 389 00:21:16,240 --> 00:21:19,400 Speaker 1: is not you know, happening as fast as it's going 390 00:21:19,440 --> 00:21:23,000 Speaker 1: to happen in China. So ultimately, what do you think 391 00:21:23,080 --> 00:21:26,800 Speaker 1: this means for the global economy when the entire world 392 00:21:27,000 --> 00:21:31,040 Speaker 1: is going to be a little bit older. Well, you know, ultimately, 393 00:21:31,080 --> 00:21:34,120 Speaker 1: actually it has to act as a break on an 394 00:21:34,119 --> 00:21:38,120 Speaker 1: economic growth, right, It has to increase the burden on 395 00:21:38,280 --> 00:21:41,080 Speaker 1: the younger people of the day, and it will of 396 00:21:41,080 --> 00:21:45,080 Speaker 1: course increased the cost associated with supporting a family because 397 00:21:45,080 --> 00:21:47,480 Speaker 1: we might reach a point where you know, you have 398 00:21:47,520 --> 00:21:50,160 Speaker 1: a young family supporting their own young kids and having 399 00:21:50,200 --> 00:21:52,520 Speaker 1: to alter prop up their elderly relatives. You can see 400 00:21:52,520 --> 00:21:56,440 Speaker 1: how that scenario could could rise right around the right 401 00:21:56,480 --> 00:21:59,800 Speaker 1: around the world, and that will be a negative for 402 00:22:00,000 --> 00:22:02,399 Speaker 1: noble vows. That will act as a break on innovation, 403 00:22:03,119 --> 00:22:04,560 Speaker 1: and I think that's just going to be a burden 404 00:22:04,600 --> 00:22:07,960 Speaker 1: that will need to be carried unless, unless, you know, 405 00:22:08,080 --> 00:22:11,119 Speaker 1: attitudes do change, and for example, place like China, the 406 00:22:11,160 --> 00:22:14,920 Speaker 1: birth rate does start to improve and more is done 407 00:22:14,960 --> 00:22:19,320 Speaker 1: by government and policymakers in terms of child subsidies and 408 00:22:19,320 --> 00:22:22,520 Speaker 1: in terms of doing more for paternity care for parents 409 00:22:22,520 --> 00:22:25,439 Speaker 1: and ensuring young parents can stay in their workforce. If 410 00:22:25,480 --> 00:22:27,480 Speaker 1: all of that happened, maybe we can book The Trend. 411 00:22:27,480 --> 00:22:29,679 Speaker 1: But I would say the scenario that you paint for 412 00:22:29,680 --> 00:22:33,119 Speaker 1: the world economy probably isn't very positive and it's not 413 00:22:33,160 --> 00:22:36,840 Speaker 1: a very light note, but I think it's a serious one. Well, 414 00:22:37,240 --> 00:22:40,960 Speaker 1: that's certainly something for global policymakers to be thinking about. 415 00:22:41,240 --> 00:22:43,320 Speaker 1: And thanks so much for joining us today. This is 416 00:22:43,320 --> 00:22:46,840 Speaker 1: a great discussion. Thank you so much, Acki, and thanks 417 00:22:46,840 --> 00:22:49,600 Speaker 1: again for listening to Bloomberg Benchmark. We're going to be 418 00:22:49,680 --> 00:22:52,159 Speaker 1: back again next week. Until then, you can find us 419 00:22:52,200 --> 00:22:56,199 Speaker 1: on the Bloomberg terminal and Bloomberg dot com, also on iTunes, 420 00:22:56,320 --> 00:22:59,600 Speaker 1: pocket cast, ditch your Google Play, and while you're there, 421 00:22:59,640 --> 00:23:02,119 Speaker 1: please a minute to rate and review the show. This 422 00:23:02,320 --> 00:23:06,000 Speaker 1: really helps more people find our podcast and let us 423 00:23:06,040 --> 00:23:07,640 Speaker 1: know what you thought of the show. You can talk 424 00:23:07,680 --> 00:23:11,040 Speaker 1: to us and follow us on Twitter at Enda Current 425 00:23:11,280 --> 00:23:14,399 Speaker 1: for our guest Enda and aki Ito seven for me. 426 00:23:14,800 --> 00:23:16,159 Speaker 1: See you next week. M