Do We Have Any Meta-Studies, Evidence-Based Review on What Will Happen to China?

Hi Everyone,

Some of my friends and I are getting in a debate about what will happen to China, and whether there are prospects for me (or anyone on this forum) to stay here.

1. One, very intelligent one, thought it would become another Japan or Korea. "Once booming, but now burnt out and in a long decline, especially with old people on pensions."

2. I once read an article that Japan and Korea are on two different trajectories. Japan has these problems; but, Korea will make it.

3. Specific to China, do we have actual evidence-based predictions on will happen?

I miss 2010-2019, as the country was developed to sufficient living standards, jobs were plentiful, and money was good.

The only positive of today is that real estate prices are stagnant or declining. We can find a way to buy some sort of property somewhere in China, and it won't be 10x as expensive ten years from now.

China has a few issues, but none are insurmountable.

1.  Yes, it sucks for those who own a lot of properties, but lower real-estate prices are making life easier for those who need to buy a place.  Personally, I think real estate is still overpriced, but it's definitely not as overpriced.  Now we wait and see.  Does it:

A.  Have a second correction to bring prices even more in line with people's salaries.
B.  Stay fairly flat as salaries increase enough to make it more affordable.
C.  Enter the cyclic boom/bust cycle common in a number of other countries.

The outcome will be hard to predict, since government policies will have a massive influence and there are competing priorities over which priorities get the biggest share of attention.

My personal advice - if you find your dream home and can afford it, get it now so you don't have to worry about what happens to housing prices years or decades from now.

2.  The population has begun to shrink.  If we believe the western press, China would already be 25 years into a "The Last of Us" scenario.  In reality, Chinese people are still having children, but there are more childless people and fewer of thoe who do reproduce opt for a 2nd or 3rd child.  This is NOT uncharted territory.  Numerous countries have population declines, with some having population declines that have continued for decades.  Since China wasn't the first country to face this issue, it can avoid wasting time on some of the "If we do A and B, birthrates will increase" plans that already have failed miserably elsewhere.  The good news is that some of the areas in China with the best incentives for having children are showing noticable improvements in fertility rates, so there's no reason to belive that China can't at least bring fertility numbers up closer to replacement levels.

Add in the progress on humanoid robots and the "how will we care for a growing senior population?" conundrum can be resolved.

3. Economic slowdowns.  This is two-fold.

A.  There's a major trading partner with a bad habit of slapping tariffs and sanctions on any Chinese company that is catching up (or getting into the lead) in various technologies.  Unfortunately, that country has a habit of forcing other countries into following its unilateral sanctions.  Oddly, it now has a president who changes his mind on major issues every 2 to 4 days.

President Xi was VP when that other country almost collapse its entire banking systen during the subprime mortgage crisis in 2008.  If that ship had sunk then, China (and Europe) would have gone down too.  Expanding Chinese markets overseas needed to be done, but so much of the rest of the world was very poor.  This is why one of the first initiatives Xi took when he became president was to create the Belt and Road initiative to help other countries (mostly developing countries) improve their economic capacity.  So far, it's working.  Trade with developing countries has HUGELY increased, so issues with that other country affect a much smaller percentage of China's imports and exports than they used to.

B.  Chinese consumers are still a bit too good at saving money.  This is mostly lingering worries about needing financial reserves in case of another crisis like Covid or from trade issues.  In this case, there are already signs of a turn around.  Consumer spending is growing, but the increase is slower than desirable.  The good news is that each month that things keep showing signs of even very modest improvement provides more confidence for the next month.  Some spending incentives like trade-ins for various household goods are also helping.  I believe we'll see some other types of incentives tried here and there to find the best way to get consumer spending growing in a faster and more self-sustaining way.

Just a pretty uninformed point, although Japan is famous for having 20 years of 0% growth or whatever, when you go there it's still a great place, like when I went I spent time just walking around the suburbs because it's so clean and relaxed. China will never be Japan just because it's a really different place, but even with the apparent slowing economy, it's still a safe place and the infrastructure is getting better and better.
I think that the decline of the USA is going to make China rich as well, never lived there but from the news the US seems to be commiting suicide

Thank you for all the points.

You mix theoretical economics and practical insight ("common sense"?). Unfortunately, most economic experts fail at the latter.

It sounds like I will be okay in China. It is just a question of whether my best effort saves me $2K USD a month (bad economy) or $4K+ USD a month (boom economy).

Just keep working hard, learning in the classroom and on the job, saving more, investing in international retirement accounts.

I have a theory on this. It's not researched or anything, just my impression so 'it is what it is'

This kind of 'neoliberalism' or 'late stage capitalism' is definitely at the end of the cycle. Whatever you think of capitalism, the 500 years or so that it existed have seen humanity change unrecognisably, and mostly for the better (I know this sentence has a lot of debatable parts, but it's not the main point, and I believe that it's not super controversial in any part).
With Neo Liberalism I think that in a sense we have reached an 'end of history' in that there is not really anything left that capitalism can do. You can see it in western countries where these crises come up and there are solutions that seem obvious, but they are against the rules. China has done a speedrun on capitalism and now they are in the rich parts at least, getting to the point that the west is at roughly where pepole are overeducated and there's not really enough things to do.
I would say that China is better positioned to deal wth this, not because they have a hammer and sickle on the flag or because it's such a vast country, but simply because of their relationship to capitalism. It didn't start in 1978 in China, but at the same time it is foreign thing to them, China was still kind of feudal for the most part until the Revolution, in Europe it's just so old we think it was always there.
But also on the practical level, the government is opaque and you kind of imagine that there are a lot of old guys who are useless but put in the work back in the day quite high up, but especially on the national level, they are able to create and execute plans.
The easiest example is the high speed rail system. That was only a couple of lines when I first moved here in 2009, and it was still a thing that spring festival was one of the most insane things in the world and 'don't go anywhere on spring festival' because the bus and train stations were just full of really poor workers and really shady people preying on them.
No other country in the world could do that. Like one of the reasons that the USA doesn't have high speed trains is that it would be impossible to organise for them.
One more thing then I'll stop lol
When the US had the crash in 2008, that summed it up, there was this huge structural problem that people had been talking about for the whole decade, but it still caught the government unawares, and they didn't have a solution they just printed money.
In China, if they had a similar crash, they would/will struggle, you wonder how long this can go on. I do think though, that they would never just double down on the mistake. It would either be the government has a good solution and recovers, or a bad one and things get worse, it's just not in the system to have a crisis and then continue with the same path and pretend it's ok. You could argue that is why Xi is the opposite of Hu, they knew there is something in the pipeline and they weren't going to keep pretending that it was 2005 forever.

And now things get extra fun.  A certain person in the USA had to roll back his global tariffs on the rest of the world to 10% while he tries to figure out what to do about China being willing to endure temporary pain instead of giving in to pressure from America.

I'd pay money to have access to the audio and video feeds from the shoe section, housewares section, and electronics section of an American WalMart as supplies of some goods dwindle while prices shoot up.

And now things get extra fun.  A certain person in the USA had to roll back his global tariffs on the rest of the world to 10% while he tries to figure out what to do about China being willing to endure temporary pain instead of giving in to pressure from America.

I'd pay money to have access to the audio and video feeds from the shoe section, housewares section, and electronics section of an American WalMart as supplies of some goods dwindle while prices shoot up.

I do have this horrible thought in the back of my mind that whatever takes and plans for myself and so on, if the USA doesn't stabilise it all just might end in a stupid war from the USA

I doubt even the US is crazy enough to start shooting, but I'm waiting to see if the trade war escalates any further.

One amusing point.  Smart Phones and Computers got exempted from the new tariffs.

This means someone in the US who wants to buy a Chinese computer doesn't have to worry about tariffs.  On the other hand, a company that builds computers in the US will be paying 145% tariff on all the Chinese components they buy and 10% on any components from other countries.  That sounds like a brilliant plan to kill any business that makes PCs inside the US.