WEBVTT - Episode 28: China's Demographic Time Bomb 0:00:00.080 --> 0:00:02.800 One economists said, you know, John is probably best described 0:00:02.840 --> 0:00:08.240 as an unruly teenager. I love that, and that's why 0:00:08.280 --> 0:00:10.119 we're so busy, you know, everything from its market, the 0:00:10.119 --> 0:00:11.920 treat of what's happening on the ground. It's a bit 0:00:11.960 --> 0:00:14.400 like that teenager. There's just so much to keep an 0:00:14.440 --> 0:00:24.799 eye on. Hello, and welcome back to Bloomberg Benchmark, a 0:00:24.840 --> 0:00:29.000 podcast about the global economy. It is Thursday, February tenth. 0:00:29.200 --> 0:00:32.760 I'm aki Ito, acting Tokyo Beer chief with Bloomberg News. 0:00:33.479 --> 0:00:36.919 Tori and Dan sadly aren't going to be joining today. 0:00:37.520 --> 0:00:41.480 Dan's traveling in Arizona right now, and Tori is being 0:00:41.479 --> 0:00:44.599 the good global citizen that she is and volunteering for 0:00:44.640 --> 0:00:47.680 the evening. But I have a very special guest with 0:00:47.760 --> 0:00:50.440 me here and the current is on the line from 0:00:50.440 --> 0:00:54.360 Hong Kong. Hi Enda, Hi, Hey, how's it going very well? 0:00:54.400 --> 0:00:59.000 Thank you good? You know, and along with being the 0:00:59.080 --> 0:01:02.760 nicest person I've ever talked to, who I've actually never 0:01:02.880 --> 0:01:09.880 met in person, you're Bloomberg's chief Asia economics correspondent. Tell 0:01:09.920 --> 0:01:12.520 us what you do every day? Well, actually, it's such 0:01:12.560 --> 0:01:14.800 an exciting canvas here and you know, as you know 0:01:14.840 --> 0:01:17.200 and our listeners know the Asian economy is changing before 0:01:17.240 --> 0:01:20.160 our eyes, and there's so much going on, so much 0:01:20.240 --> 0:01:21.800 changing that we're trying to get our head around and 0:01:21.800 --> 0:01:24.240 to understand in terms of what it means for Asia, 0:01:24.720 --> 0:01:26.440 what it means for the for the rest of the world, 0:01:26.480 --> 0:01:29.880 of course, not least China. So my role involves everything 0:01:29.920 --> 0:01:33.479 from news gathering and analysis through to editing and TV 0:01:33.680 --> 0:01:37.800 and of course doing the Benchmark podcast. I love it well, 0:01:38.080 --> 0:01:39.520 you know, and then we have you on the show 0:01:39.560 --> 0:01:42.640 today because we're talking about China, which has you know, 0:01:42.760 --> 0:01:46.480 just completely dominated the headlines since the beginning of the year, 0:01:47.000 --> 0:01:50.920 and obviously that nervousness has spread throughout the world. I 0:01:50.960 --> 0:01:53.600 think it's been a pretty hectic start of the year 0:01:53.640 --> 0:01:56.160 for you, hasn't it. Yeah, it has, and at all 0:01:56.240 --> 0:01:59.320 points to China, accum. You know, what's going on there 0:01:59.360 --> 0:02:03.520 in the world second biggest economy is an unprecedented economic transformation, 0:02:03.960 --> 0:02:06.800 the scale which we haven't seen before. And as China 0:02:06.920 --> 0:02:10.520 grows and changes, the world will start feeling those growing pains. 0:02:10.560 --> 0:02:13.359 And one economists said, you know, China is probably best 0:02:13.400 --> 0:02:19.200 described as an unruly teenager. I love that, and that's 0:02:19.200 --> 0:02:21.120 why we're so busy, you know, everything from its market, 0:02:21.160 --> 0:02:23.200 the treat of what's happening underground. It's a bit like 0:02:23.240 --> 0:02:25.800 that teenager. There's just so much to keep an eye on. 0:02:26.080 --> 0:02:28.840 I love it. Well. I guess beyond those, you know, 0:02:28.880 --> 0:02:32.640 immediate emergencies that we're seeing in the day to day headlines, 0:02:33.160 --> 0:02:36.760 there's kind of this longer run crisis that's simmering below 0:02:36.760 --> 0:02:41.120 the surface. And that crisis is China's rapidly Asian population 0:02:41.720 --> 0:02:44.320 and what's already a shrinking workforce. And I think this 0:02:44.440 --> 0:02:46.440 is something that you talk about all the time, and 0:02:46.919 --> 0:02:50.760 it's a crisis that other countries, I guess have entered. First. Japan, 0:02:51.200 --> 0:02:53.840 where I am right now, is a really good example 0:02:53.919 --> 0:02:57.320 of a country that's grappling with all these consequences in 0:02:57.400 --> 0:03:00.960 real time right now. But China's going to be there 0:03:01.000 --> 0:03:04.480 pretty soon over the next few decades. So and should 0:03:04.520 --> 0:03:06.520 we go through some of the key numbers first to 0:03:06.560 --> 0:03:10.320 set the stage. Sure, yeah, I guess you know, we 0:03:10.320 --> 0:03:14.400 can start with the population. So China's currently home to 0:03:15.320 --> 0:03:19.359 one point three eight billion people, which makes it the 0:03:19.400 --> 0:03:22.840 world's biggest country by population. But I read that this 0:03:22.880 --> 0:03:26.400 isn't for long. That India is going to overtake China 0:03:26.639 --> 0:03:31.160 in the early twenties. Gosh, and if that happens, would 0:03:31.280 --> 0:03:35.400 China no longer be the world's largest country for like 0:03:35.480 --> 0:03:38.480 the first time in history. Well, that's that's what the 0:03:38.480 --> 0:03:42.280 indications are at a moment. Ay, Yeah, that's amazing. And 0:03:42.320 --> 0:03:46.040 I guess it's working age population already started shrinking in 0:03:47.560 --> 0:03:50.080 And I laughed when you talked about China being a 0:03:50.120 --> 0:03:53.520 teenager right now, because you know, the media and Asian 0:03:53.720 --> 0:03:57.880 ninety was twenty two years old, and right now the 0:03:57.920 --> 0:04:01.160 median age is thirty seven, so maybe a little older 0:04:01.160 --> 0:04:05.640 than a teenager. But by twenty fifty, the median age 0:04:05.800 --> 0:04:09.680 is going to be fifty years old, so solidly middle aged. 0:04:10.040 --> 0:04:12.880 And this is really interesting. By then, the average person 0:04:12.920 --> 0:04:16.240 in China is going to be actually much older than 0:04:16.279 --> 0:04:19.920 the average person in the US, in Canada, the UK, 0:04:20.400 --> 0:04:24.160 all of Skandinavia and a lot of other developed economies. 0:04:25.560 --> 0:04:27.560 H Well, look, maybe China is on course for a 0:04:27.600 --> 0:04:32.120 midlife crisis. You know, this all comes back to the 0:04:32.200 --> 0:04:34.960 fertility rate AKA, which at the moment is one point 0:04:35.000 --> 0:04:36.920 five five. That's one of the lowest in the world, 0:04:37.200 --> 0:04:39.320 and that's well below the rate that you need to 0:04:39.360 --> 0:04:43.400 maintain a content population, right, So, and I guess behind 0:04:43.480 --> 0:04:46.360 all of this is one of the biggest social experiments 0:04:46.360 --> 0:04:51.000 in history, which was China's one child policy that became 0:04:51.160 --> 0:04:54.520 a two child policy last year. Can you talk about 0:04:54.600 --> 0:04:58.280 how these policies came about? Sure, Look, obviously, Key, it's 0:04:58.320 --> 0:05:00.960 a very sensitive and difficult topic in China, and it's 0:05:00.960 --> 0:05:02.920 also very personal one for all the people who have 0:05:02.960 --> 0:05:05.080 been impacted by it, and you could see that from 0:05:05.120 --> 0:05:08.240 the outpouring of emotion when China dropped the one child 0:05:08.240 --> 0:05:11.200 policy late last year and went for the two child policy. 0:05:11.400 --> 0:05:14.680 As you say, it all began the late nineteen seventies 0:05:15.160 --> 0:05:17.200 and has been very to describe as one of the 0:05:17.240 --> 0:05:20.360 most ambitious demographic experiments that the world has ever seen. 0:05:21.560 --> 0:05:25.800 Partly it started because in nineteen seventy nine, Thankoping was 0:05:25.839 --> 0:05:28.359 worried about the writing population in China and he was 0:05:28.440 --> 0:05:31.560 worried about what impact of writing population would have on 0:05:31.600 --> 0:05:34.760 the nation's scarce resources. They thought the best thing to 0:05:34.760 --> 0:05:38.360 do would be to limit population growth, and the thinking 0:05:38.520 --> 0:05:40.159 was that way there would be enough to go around 0:05:40.240 --> 0:05:43.680 for everybody. But of course, ultimately that policy is only 0:05:43.760 --> 0:05:47.520 undermined the growth and the working age population shrank last 0:05:47.600 --> 0:05:49.840 year for the first time in two decades, and now 0:05:49.880 --> 0:05:53.719 we're about to see the cohort of senior citizens grow rapidly. 0:05:53.920 --> 0:05:56.240 So that's what the net result has been of China's 0:05:56.240 --> 0:06:01.040 one child policy. Right, And to confirm China only allows 0:06:01.160 --> 0:06:04.640 parents to have two children. Right, It's not like there's 0:06:04.680 --> 0:06:07.880 been a lift on all restrictions altogether. Now, there has 0:06:07.920 --> 0:06:10.080 been a gradual easing of the one child policy over 0:06:10.120 --> 0:06:13.440 recent years, but it officially came to an end last 0:06:13.520 --> 0:06:15.799 year as the new five year Plan has been developed 0:06:15.800 --> 0:06:19.719 and now formally a two child policy. I guess we 0:06:19.720 --> 0:06:23.960 should talk about why economists are worried about this demographic 0:06:24.000 --> 0:06:28.159 trend of uh an Asian and shrinking working age population. 0:06:28.600 --> 0:06:31.000 Do you want to walk us through that? Sure? Well, look, 0:06:31.440 --> 0:06:35.040 it's important actually because when you fear people in the workforce, 0:06:35.160 --> 0:06:37.440 you have few people to grow the economy, and you 0:06:37.480 --> 0:06:40.360 have fewer people spending. And you know what, an aging 0:06:40.400 --> 0:06:43.480 society is actually pretty expensive. And I think before I 0:06:43.560 --> 0:06:45.480 came on, I just looked up some more bank numbers 0:06:45.480 --> 0:06:46.880 and it might be worked having a look at some 0:06:46.880 --> 0:06:49.400 of these World Bank numbers to understand the gravity of 0:06:49.440 --> 0:06:51.960 the issue in China. These are the figures that struck 0:06:52.000 --> 0:06:55.000 me the number of babies promited as a result of 0:06:55.040 --> 0:06:58.039 the policy. So we went from twelve point one per 0:06:58.120 --> 0:07:03.239 one thousand people in and that was from a post 0:07:03.279 --> 0:07:05.919 reform peak of twenty three point three in the in 0:07:05.960 --> 0:07:09.640 the late nineteen eighties, and so that's effectively that's effectively 0:07:09.680 --> 0:07:13.080 half and it's below the US rate of about thirteen. 0:07:13.560 --> 0:07:16.960 Malaysia has eighteen and Vietnam has um has the sixteen, 0:07:17.160 --> 0:07:20.320 So that kind of gives an indication of the scale 0:07:20.320 --> 0:07:22.360 of the problem they have on on the birth rate. 0:07:22.680 --> 0:07:25.400 But of course we know that China also has on 0:07:25.440 --> 0:07:27.400 the other side of the ledger might be hard to 0:07:27.400 --> 0:07:29.000 believe for other parts of the world, but they have 0:07:29.200 --> 0:07:33.360 rising wages and labor shortage in some areas, so they're 0:07:33.400 --> 0:07:39.120 already losing out a competitiveness because of of shortage labor force. 0:07:39.200 --> 0:07:41.800 And when you throw an aging population an aging workforce 0:07:41.800 --> 0:07:44.800 into the mix, this demographic challenge is really not a 0:07:44.880 --> 0:07:48.200 challenge of China needs right now, right right and and 0:07:48.240 --> 0:07:51.040 one thing you know we've definitely seen here in Japan 0:07:51.280 --> 0:07:55.280 is just a budget that's stretched to the complete max 0:07:55.800 --> 0:07:59.080 um to be able to pay for these fewer adults 0:07:59.280 --> 0:08:03.440 working to support the growing number of retirees. What's China's 0:08:03.480 --> 0:08:06.000 government debt situation like right now, do you think it's 0:08:06.000 --> 0:08:09.400 going to be able to take it? Well? Okay, so sure. 0:08:09.520 --> 0:08:12.920 Physically China is probably in a stronger position than Japan. 0:08:13.040 --> 0:08:16.400 It's central government that is quite low. But the overall 0:08:16.720 --> 0:08:19.000 and I should say that the savings right the household 0:08:19.000 --> 0:08:21.840 savings rate is relatively high, but you know, the overall 0:08:21.880 --> 0:08:25.600 economy is under quite a lot of debt right now, 0:08:25.720 --> 0:08:28.560 both a corporate level and state on enterprise level and 0:08:28.600 --> 0:08:31.120 the local government level. So it's not like, you know, 0:08:31.280 --> 0:08:34.160 China is altogether swimming in money that they can unleash 0:08:34.400 --> 0:08:37.679 and give their retirees a kind of a golden lifestyle. 0:08:38.040 --> 0:08:40.400 But I think I think the problem is that ultimately 0:08:40.480 --> 0:08:43.439 an aging population will cost money, and that will cost 0:08:43.600 --> 0:08:46.640 China money, and that will boost healthcare costs and put 0:08:46.720 --> 0:08:49.240 bigger burdens on the younger people and on the young 0:08:49.280 --> 0:08:52.559 families in China to support their their lrelis now, the 0:08:52.640 --> 0:08:56.440 United Nations projected the number of Chinese people age sixty 0:08:56.480 --> 0:08:59.400 and older with more than double in the next twenty 0:08:59.480 --> 0:09:04.240 five years, four and one million by that group share 0:09:04.280 --> 0:09:10.480 of the population will be around up from around last year. 0:09:10.880 --> 0:09:13.920 So just think about the costs associated with that, and 0:09:14.440 --> 0:09:17.160 with an aging society, with the various illness and disease 0:09:17.160 --> 0:09:19.600 that's associated with it, and the burden that puts on 0:09:19.679 --> 0:09:23.360 young people. That's that's something of a taking time right, right, 0:09:23.760 --> 0:09:28.760 And how old are you right now? Okay, so you're 0:09:28.800 --> 0:09:30.920 totally young, so I can say this in front of you. 0:09:31.080 --> 0:09:34.559 But there's also you know, just that an older population 0:09:34.720 --> 0:09:38.160 leads to a less dynamic economy. It's one of the 0:09:38.200 --> 0:09:41.320 reasons why I love living in San Francisco, in the 0:09:41.320 --> 0:09:43.920 San Francisco Bay Area, which is just full of so 0:09:43.960 --> 0:09:47.640 many young people, you know, throwing out these crazy ideas. 0:09:48.080 --> 0:09:50.240 Most of them are terrible, most of them are going 0:09:50.280 --> 0:09:53.280 to fail, but occasionally, you know that one crazy idea 0:09:53.280 --> 0:09:55.960 of sticks and changes the world, and you can't really 0:09:56.000 --> 0:10:00.240 imagine happening that a lot in a country with so 0:10:00.320 --> 0:10:05.240 many older people. That's right, I mean, look, innovation at 0:10:05.240 --> 0:10:08.000 its core needs to be driven by ideas, by energy, 0:10:08.000 --> 0:10:11.199 by enthusiasm, and a lot of that is generated by 0:10:11.320 --> 0:10:14.160 you know, young people behind young startups coming out of 0:10:14.280 --> 0:10:18.360 universities and bustling with energy and full of ideas. We 0:10:18.440 --> 0:10:20.360 only have to look at Japan. Japan is still, of 0:10:20.400 --> 0:10:23.599 course a global center for research and development and innovation, 0:10:24.800 --> 0:10:27.040 but you know, it's also slipped behind the curve a bit. 0:10:27.080 --> 0:10:31.800 It's the smartphone generation pretty much passed by Japan. It was, 0:10:31.840 --> 0:10:34.760 of course the home of home entertainment at one point, 0:10:34.760 --> 0:10:37.400 but the smartphone era has passed by, so to speak. 0:10:37.600 --> 0:10:39.640 And you can see how the lives of Korea and 0:10:39.720 --> 0:10:43.360 China are doing more innovation front. But ultimately, when you 0:10:43.400 --> 0:10:45.600 have a declining birth rate and when you have an 0:10:45.600 --> 0:10:48.960 aging population, that will act as a break on on 0:10:49.040 --> 0:10:51.520 the workforce, that will limit the amount of talent that 0:10:51.800 --> 0:10:54.240 in that workforce, and that will fee you through towards 0:10:54.240 --> 0:10:56.679 trying to contribute on on the global stage. And I 0:10:56.720 --> 0:11:00.400 think that's definitely consideration. And then we just aked about 0:11:00.440 --> 0:11:04.120 all these broad forces. But in terms of numbers, what 0:11:04.360 --> 0:11:07.160 is China's economic growth going to look like in the 0:11:07.240 --> 0:11:11.240 future from the current piece of about seven percent growth 0:11:11.320 --> 0:11:16.840 per year? Yeah, okay, So China grew in fifteen at 0:11:17.000 --> 0:11:20.560 six point nine percent for the year. That was, on paper, 0:11:20.600 --> 0:11:23.319 its lowest pace of growth in the quarter of a century. 0:11:23.920 --> 0:11:26.520 Lots of economists are skeptical about the data and will 0:11:26.600 --> 0:11:29.640 question the numbers, but you know, either way, take it 0:11:29.640 --> 0:11:32.480 to China grew somewhere above six percent percent last year, 0:11:32.480 --> 0:11:35.280 and when you consider the size of that economy and 0:11:35.440 --> 0:11:39.120 relative to its peers, probably not a bad performance, some 0:11:39.200 --> 0:11:41.920 would say. But going forward, as we mentioned at the 0:11:41.960 --> 0:11:45.239 start of the show, China is undergoing this big transformation 0:11:45.360 --> 0:11:47.160 right now, and they want to move away from an 0:11:47.160 --> 0:11:51.319 economy that's really fueled by by death funded heavy industry 0:11:51.400 --> 0:11:54.120 and one that's really belonged in exports, the one that's 0:11:54.160 --> 0:11:57.520 driven much more by internal demands. So they want consumers 0:11:57.559 --> 0:11:59.679 spending money on the high street and they want a 0:11:59.800 --> 0:12:02.600 row ring services industry. Now, so what does that mean. 0:12:02.920 --> 0:12:05.559 It means the growth rate will probably be lower and 0:12:06.040 --> 0:12:09.160 at the NPC, which is ongoing in Beijing right now, 0:12:10.000 --> 0:12:12.040 the policy makers have come up with a new range. 0:12:12.200 --> 0:12:14.440 Rather than a hard target, they're now talking about a 0:12:14.559 --> 0:12:18.400 range of between six and a half and seven heading 0:12:18.400 --> 0:12:20.920 out over the next five years. Of course, that does 0:12:20.960 --> 0:12:23.520 give them riggle room, and you know, it doesn't give 0:12:23.559 --> 0:12:25.920 them a hard target that they will be scolded for missing. 0:12:26.000 --> 0:12:28.960 On the other hand, it's still a pretty ambitious target 0:12:29.120 --> 0:12:31.480 when you compare to both hit the emerging market appears 0:12:31.520 --> 0:12:34.120 and obviously the developed world, So that means there's still 0:12:34.120 --> 0:12:37.520 a burden on China to hit that growth target, and 0:12:37.559 --> 0:12:40.240 that means they may need to rely on some of 0:12:40.280 --> 0:12:43.640 the old playbooks to sugar hit the growth. Spend more, 0:12:44.160 --> 0:12:46.560 borrow and more and then everybody. That will lead to 0:12:47.040 --> 0:12:49.800 perhaps reform being pushed to one side at the expense 0:12:49.840 --> 0:12:51.679 of growth in the near term. And that's the real 0:12:51.800 --> 0:12:54.760 balancing act, that's the real juggle, that's the backdrop that's 0:12:54.760 --> 0:12:58.400 going on in China's economy right now, Aki, right, right, 0:12:58.600 --> 0:13:01.600 And when you think of that the potential growth way 0:13:01.800 --> 0:13:05.360 like the speed limit of China's economy. Surely that's not 0:13:05.360 --> 0:13:07.920 going to be seven in a decade or two, right, 0:13:08.120 --> 0:13:11.200 That number has to come down. Yeah, I think that's 0:13:11.240 --> 0:13:13.679 the that's the feeling here that the number will gradually 0:13:13.679 --> 0:13:15.280 start to come down. And when you consider this new 0:13:15.400 --> 0:13:18.079 range of six and a half or seven, one interplation 0:13:18.240 --> 0:13:20.400 is you know, actually that gives them quite a bit 0:13:20.400 --> 0:13:22.720 of regular room because as we're moving to the latter 0:13:22.800 --> 0:13:25.240 stages of the five year plan, the new five year 0:13:25.240 --> 0:13:27.760 plan that starts, and you know, maybe they can go 0:13:27.840 --> 0:13:29.880 below six and a half, but I think the bigger 0:13:29.920 --> 0:13:31.920 point actually, even if they do go below six and 0:13:31.960 --> 0:13:33.440 a half, even if it does go down to six 0:13:33.440 --> 0:13:38.360 and lower, it's about sustainable growth for China's economy, and 0:13:38.400 --> 0:13:40.960 I think I think both China and the world would 0:13:41.040 --> 0:13:45.240 welcome that kind of growth rather than the unsustainable breakneck 0:13:45.320 --> 0:13:48.280 pace we witnessed. Will say, you know over the last 0:13:48.280 --> 0:13:51.160 decade when I grew double digit pace, but ultimately left 0:13:51.160 --> 0:13:53.920 the hangover of a huge debt mountain and a lot 0:13:53.960 --> 0:13:55.840 of problems in the economy that that they're still trying 0:13:55.840 --> 0:13:57.520 to deal with. And then we only have to look 0:13:57.520 --> 0:14:00.199 to Japan what happened in the nineteen eighties when the 0:14:00.240 --> 0:14:04.479 bubble eventually burst. It still hasn't fully recovered. Speaking of sustainability, 0:14:04.520 --> 0:14:07.920 one of the interesting things I think is Asian so 0:14:08.040 --> 0:14:12.200 far in the world has been a phenomenon mostly just 0:14:12.320 --> 0:14:15.480 for rich society's right that you know, rich societies that 0:14:15.559 --> 0:14:19.360 already have this established infrastructure to care for a greater 0:14:19.480 --> 0:14:23.000 number of old people. But China is still making that 0:14:23.200 --> 0:14:27.040 transition right now from a developing two developed economy like 0:14:27.360 --> 0:14:30.080 that economists you were talking about was saying, you know, 0:14:30.080 --> 0:14:33.000 it's kind of this teenager trying to mature into an adult. 0:14:33.120 --> 0:14:36.360 So do you think China is ready for this future 0:14:36.480 --> 0:14:39.440 of lots of old people. No, it's not. It's important 0:14:39.480 --> 0:14:42.560 to remember that China is still a developing nation. Aki. 0:14:43.480 --> 0:14:45.480 Last week, I was in meeting with someone who was 0:14:45.680 --> 0:14:50.240 recounting to their experience of a hospital in rural China, 0:14:50.720 --> 0:14:55.320 and they recounted the hygiene standards, the facility that weren't 0:14:55.320 --> 0:14:58.960 offer and the condition of equipment in this hospital, and 0:14:59.040 --> 0:15:01.280 the point of discourse was a kind of a vivid 0:15:01.360 --> 0:15:05.960 reminder that vast parts of China are still very much developing. Moreland, 0:15:06.000 --> 0:15:09.240 when you move away from the fast growing eastern coastal 0:15:09.400 --> 0:15:12.360 regions and the big financial hub like Shanghai and of 0:15:12.400 --> 0:15:15.640 course the global capital and is Beijing, there's still a 0:15:15.680 --> 0:15:18.160 long way to go in terms of catching up with 0:15:18.600 --> 0:15:21.760 the wealth of the developed world in rural China. And 0:15:21.840 --> 0:15:25.760 that raises the question about how will these elderly people 0:15:25.840 --> 0:15:28.560 cope in the country side as they go forward with 0:15:28.840 --> 0:15:31.160 on an already small family to support them. And of 0:15:31.200 --> 0:15:33.960 course that brings up the question of of migration. As 0:15:33.960 --> 0:15:37.440 you know, and there's considerable migration in Shana in terms 0:15:37.440 --> 0:15:39.720 of those leaving wanting to leave the rural area and 0:15:39.760 --> 0:15:42.400 move towards the urban centers. I mean that works up 0:15:42.440 --> 0:15:45.720 to a point, but it leaves behind a society that's 0:15:45.800 --> 0:15:48.920 quite isolated, and of course it lacks the resources and 0:15:49.040 --> 0:15:51.480 lacks of funding to have the facilities that are needed 0:15:51.800 --> 0:15:55.040 on the healthcare side of things, and and and social care. 0:15:55.120 --> 0:15:57.920 So I think that's probably a genuine cause for concern, 0:15:58.040 --> 0:16:02.240 and that China's healthcare isn't yet anything like on the 0:16:02.280 --> 0:16:04.600 scale that we would appreciate it in the in the 0:16:04.640 --> 0:16:08.680 developed world, and it's still quite imbalanced within China itself. Well, 0:16:09.360 --> 0:16:13.160 you know, in my completely immature opinion, I feel like 0:16:13.200 --> 0:16:16.880 all of these problems were completely foreseeable from decades ago. 0:16:17.040 --> 0:16:20.280 So why do you think it took policy makers so 0:16:20.320 --> 0:16:23.240 long to scrap the one child policy? And and why 0:16:23.240 --> 0:16:26.600 do why does the government have restrictions on the number 0:16:26.600 --> 0:16:29.880 of children parents can have all together? Well, so, you know, 0:16:29.960 --> 0:16:32.920 this is a very motive and difficult issue in in China, 0:16:33.000 --> 0:16:36.080 and the thinking behind it at the time was China 0:16:36.120 --> 0:16:38.240 would not be able to cope, that the nation would 0:16:38.240 --> 0:16:41.640 not be able to feed itself, and if the population 0:16:41.800 --> 0:16:43.680 continue to grow at the pace that it was growing 0:16:43.720 --> 0:16:46.080 back in the late seventies when this policy was introduced. 0:16:46.120 --> 0:16:49.240 And remember food security is a big issue for China. 0:16:49.560 --> 0:16:53.120 They really try to promote an idea of self reliance, 0:16:53.400 --> 0:16:56.960 and that's why they're moving around the world right now, 0:16:57.040 --> 0:16:59.800 buying all kinds of assets in the in the agriculture 0:17:00.000 --> 0:17:02.400 world to make sure that China can be fed and 0:17:02.480 --> 0:17:05.200 that they have the technological know how to grow crops 0:17:05.200 --> 0:17:08.719 and to transform their farms. And I think that's one 0:17:08.760 --> 0:17:10.720 of the reasons why they were still looking to change 0:17:10.760 --> 0:17:15.680 the policy, because they were convinced that the population was 0:17:15.680 --> 0:17:18.960 was unsustainable the size of it. They weren't appreciative of 0:17:19.119 --> 0:17:21.359 the impact it would They weren't appreciative of the impact 0:17:21.359 --> 0:17:24.359 it would usibly have on economic growth and on their workforce. 0:17:24.440 --> 0:17:26.720 And you know, they've now ended up in a situation 0:17:26.760 --> 0:17:29.920 where you have declining birth rate That ultimately means you've 0:17:29.920 --> 0:17:33.560 got a smaller population from which to draw workers, and 0:17:33.600 --> 0:17:36.920 that's going to hold back growth and in some places 0:17:36.960 --> 0:17:40.040 it's going to is driving up wages too quickly and 0:17:40.160 --> 0:17:43.680 moving causing factories to move out of China into cheaper 0:17:43.960 --> 0:17:46.920 locations in saut these ages. So I think you can 0:17:46.960 --> 0:17:50.000 consider the policy mistake, and yes, it took far too 0:17:50.040 --> 0:17:53.879 long for Chinese leadership to realize the error of their ways. Yeah, 0:17:53.960 --> 0:17:56.240 that's quite the dilemma though, you don't you don't want 0:17:56.680 --> 0:17:59.920 growing population, but you don't want a shrinking population either. 0:18:00.080 --> 0:18:03.720 I would not want to be a Chinese policymaker right now, 0:18:04.080 --> 0:18:05.920 you know. And then maybe we should have titled this 0:18:06.040 --> 0:18:11.280 episode China and Japan because we talk about Japan so much. 0:18:11.320 --> 0:18:14.280 But you know, being a Japanese person, having grown up 0:18:14.280 --> 0:18:17.720 here and also living here right now, Japan just seems 0:18:17.720 --> 0:18:21.040 like such a cautionary tale for China. I wasn't alive 0:18:21.119 --> 0:18:24.480 back then, but thirty five years ago there were apparently 0:18:24.560 --> 0:18:28.080 tons of people already talking about Japan's soon to rapidly 0:18:28.119 --> 0:18:31.199 age population, you know, and no one really did anything 0:18:31.240 --> 0:18:34.040 about it until it got to where it is today, 0:18:34.119 --> 0:18:37.680 which is a very bad situation. So do you think 0:18:37.760 --> 0:18:41.720 China is ultimately going to end up like Japan or 0:18:41.800 --> 0:18:44.280 do you think policymakers are going to be able to 0:18:44.280 --> 0:18:47.159 do something about it? Because it seems like one of 0:18:47.200 --> 0:18:51.919 the benefits of having a centrally planned government is that 0:18:51.960 --> 0:18:54.520 you can actually think about the long term instead of 0:18:54.560 --> 0:18:58.600 this messy short term nous that I think we're seeing 0:18:58.640 --> 0:19:01.040 in the US presidential probably marries right now where you 0:19:01.119 --> 0:19:04.800 just have to chase the immediate vote. Yeah, I think, 0:19:05.119 --> 0:19:07.080 you know, in the case for the defense. For China, 0:19:07.160 --> 0:19:11.679 I think, um, they have made significant economic progress, I 0:19:11.720 --> 0:19:15.480 mean quite dramatic economic progress over the three decades since 0:19:15.480 --> 0:19:18.119 they started to to open up to the outside the world. 0:19:18.520 --> 0:19:21.879 They have lifted you know, hundreds of millions of people 0:19:21.960 --> 0:19:25.119 out of poverty. And when you compare their records on 0:19:25.160 --> 0:19:28.680 probably eradication to say other developing nations, I think China 0:19:28.760 --> 0:19:31.960 probably deserves a bit of a strong tick for its 0:19:31.960 --> 0:19:35.120 efforts there. But at the same time, it's now facing 0:19:35.119 --> 0:19:37.040 some of the same problems. Like you mentioned that some 0:19:37.119 --> 0:19:39.360 of its trading rivals rates, and one of the worries 0:19:39.480 --> 0:19:43.080 in China is that maybe lifting this one child policy 0:19:43.080 --> 0:19:45.480 and moving to the two channel policy is too little, 0:19:45.880 --> 0:19:50.400 too late, because attitudes have changed in recent years. One 0:19:50.440 --> 0:19:56.080 of the phenomenon's noticed in China is that in the 0:19:56.200 --> 0:20:00.280 urbanization of China means that many couples aren't in interested 0:20:00.320 --> 0:20:04.160 in having a second child because of the costs associated 0:20:04.200 --> 0:20:06.040 with having a second child or indeed you know, a 0:20:06.040 --> 0:20:10.040 bigger family that's everything from healthcare to education costs, to 0:20:10.240 --> 0:20:12.639 general costs of living, and as the feeling now that 0:20:13.640 --> 0:20:16.199 the organization of China has reached such a such an 0:20:16.200 --> 0:20:20.359 extent that even with the government encouraging and introducing this 0:20:20.640 --> 0:20:23.600 to child policy, it may not be enough to turn 0:20:23.640 --> 0:20:25.680 the tide. That's going to be the big test for China, 0:20:25.680 --> 0:20:27.159 and that will put the onus on them. If they 0:20:27.200 --> 0:20:29.560 really want to learn from Japan's mistakes, They're going to 0:20:29.640 --> 0:20:32.680 have to do a lot more in terms of you know, 0:20:32.800 --> 0:20:37.760 the maternity care, maternity leave, and paternity leave for parents. 0:20:37.800 --> 0:20:39.040 Are going to have to make sure all of these 0:20:39.040 --> 0:20:42.120 facilities are put in place that allow couples to continue 0:20:42.160 --> 0:20:44.840 their careers and to stay in the workforce. And I 0:20:44.880 --> 0:20:47.800 think in terms of those structural forms, those are lessons 0:20:47.800 --> 0:20:50.000 they can learn from Japan and the mistakes that are 0:20:50.000 --> 0:20:54.560 made there too. Yeah, definitely. So maybe as our last 0:20:54.640 --> 0:20:57.919 question here, and I'll ask the hardest question that we 0:20:58.080 --> 0:21:02.399 are listed in our brainstorms shin. Right now, by twenty one, 0:21:03.000 --> 0:21:07.080 the world is projected to be twelve years older than 0:21:07.119 --> 0:21:11.439 it is today. So the entire world is currently in 0:21:11.480 --> 0:21:16.119 the process of Asian of maturing, although the world average 0:21:16.240 --> 0:21:19.400 is not you know, happening as fast as it's going 0:21:19.440 --> 0:21:23.000 to happen in China. So ultimately, what do you think 0:21:23.080 --> 0:21:26.800 this means for the global economy when the entire world 0:21:27.000 --> 0:21:31.040 is going to be a little bit older. Well, you know, ultimately, 0:21:31.080 --> 0:21:34.120 actually it has to act as a break on an 0:21:34.119 --> 0:21:38.120 economic growth, right, It has to increase the burden on 0:21:38.280 --> 0:21:41.080 the younger people of the day, and it will of 0:21:41.080 --> 0:21:45.080 course increased the cost associated with supporting a family because 0:21:45.080 --> 0:21:47.480 we might reach a point where you know, you have 0:21:47.520 --> 0:21:50.160 a young family supporting their own young kids and having 0:21:50.200 --> 0:21:52.520 to alter prop up their elderly relatives. You can see 0:21:52.520 --> 0:21:56.440 how that scenario could could rise right around the right 0:21:56.480 --> 0:21:59.800