The very things that made China so strong are now going to start causing it problems. Cheap labour, massive work force, financial security, open markets, preferred trading status are all gone. China’s long standing “one child” policy has caused a huge imbalance as the population ages. Huge numbers of retired workers with no government support with only one child to aid them? The list goes on…
China is no longer the cheapest labour force. India, Thailand, Vietnam, Cambodia, Mexico and others all have much cheaper labour. China itself is offshoring much of its unskilled work. China has been a major market for investment, but as USA, Japan and others want a more secure supply chain, many companies are moving out of China. With China comes trade embargoes. Many in the West are looking at China as unreliable or outright hostile.
China has some major financial issues. One of these is the fact that the government controls the money flow and which projects can go ahead. The main concern is that decisions are based on government interests, not on financial viability. Many of its Belt and Road initiatives are failing. Real estate in China is its citizens main investment (90%) with families pooling money together to own a piece. The main problem with this is that they are not living in these homes. They are sitting empty and are built very poorly. This real estate bubble is going to crash and there is going to be a reckoning.
China has grown to fast for its own good. Just like Japan, its standing in the world is going to slip. Will China start looking inward and fix these problems? Not likely. China is like a bull in a china shop, it has no allies, just the opposite, everyone is forming an alliance against this tyrant.
Is this going to bring down the present regime? Hardly. China has many strengths and one of them is the simple fact that China does not need the rest of the world. If things go really badly on the international scene, China can just pull back and weather any storm that comes their way.
image sources
- Shanghai_pudong: Henrik Hansson | CC BY-SA 3.0