According to the long list of “inevitable” events this is meant to be China`s century, a century when it overtakes the West and becomes the world’s hegemon. However, as we approach the first quarter things appear to be going seriously off the narrative. No longer is China the world’s most populous state, as we look forward its population is about to fall off a demographic cliff. The current 1.4 billion Chinese will decline to about half that by the end of the century on the base case and the pessimistic case sees less than that. And that’s not 700 million sprightly twenty-year-olds but a large grey-haired population which will need the young one to look after them and pay for them. There is no quick fix to the demographics. The impact of the one child policy has reduced the population of childbearing age, one child is now a social norm and the economic pressure on young couples means large families are unaffordable.

And how to pay for them? The Chinese economy appears to be heading for the middle-income trap where the period of fast growth suddenly slows down and the ability to move up the value chain hits a plateau. The economy has taken severe knocks and has huge debts linked to a fragile property market. Covid lockdowns have disrupted exports, fallout from the Ukraine war and Taiwan have scared overseas companies into reforming supply chains and the government clampdown on high profile entrepreneurs may well stop innovation. Taken together these are all drag factors on economic development.

This is not to write off China the country still has many strengths and will be a major power in the world economy, but it is to say the heady growth rates of previous years are in the past. The government shows no sign of wishing to reverse gear, so it is left in a trap of its own making. It remains to be seen if it can keep its grip on power when it is failing to deliver against its citizens expectations.

We are probably at the peak of China’s growth spurt from here on everything gets harder to do. 2022 saw the lowest Chinese births – 9.56 million – in recent times down from 12+ million a decade ago.  The Evergrande and other property turmoil are putting the brake on the economy. The century no longer seems to be Chinas. Increasingly the next-door neighbour in India looks better placed to claim the laurels.

Alanbrooke