Demographic Trends Cloud China's Long-Term Economic Outlook

Download PDF China's economic transformation over the past three decades is arguably the single most dramatic event in the annals of modern global development. Between 1979 and 2009, by the reckoning of the World Bank, China's GDP grew at an average of 10% per year. No country in history has ever managed to sustain such a high rate of growth for such a long time. And given China's sheer size, this extraordinary performance has perforce shifted the world economy's center of gravity. By 2009, China overtook Germany as the largest exporter of goods (its export volume that year was twice as great as Japan's). In 2010, it breezed past Japan to claim title to the world's second largest economy, behind only the United States--at least for now.

Can China's dizzying, historically unprecedented pace of economic growth continue into the future? Many well-informed world decision makers are confident that it can. Not least important, Beijing's own leadership subscribes to this view. The Chinese authorities project another quadrupling of GDP by 2030. Outside China, many financial and corporate chieftains are equally effusive about China's economic prospects.

But are such expectations realistic? It is always hazardous to envision the future as a linear extrapolation of trends from the recent past--and perhaps especially so for a country whose recent record of economic success has been so clearly exceptional. One obvious and hardly trivial problem with such optimistic extrapolations is that they do not seem to take demographic fundamentals into account.

Over the past generation, China's population trends broadly abetted the nation's economic rise. But China's demographic future promises to be very different--and far more troublesome. Impressive as China's economic accomplishments over the past generation have been, these new demographic realities may ultimately force us to revise today's received wisdom about the future of "China's rise." . . .

Nicholas Eberstadt is the Henry Wendt Scholar in Political Economy at AEI.