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The Tufts Daily
Where you read it first | Tuesday, April 23, 2024

The Strike Zone: Beijing’s precarious position

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By transitioning from a centrally planned, collectivist economy under Mao Zedong to a free market system of “capitalism with Chinese characteristics,” China has undergone an economic explosion since the late 1970s, and many scholars see the nation’s continued rise as inevitable. China’s GDP per capita is quickly rising, and its annual growth has long outpaced the United States’, leading to predictions that China’s GDP will overtake America’s by 2035.

However, China’s economic position is more precarious than many believe. Domestic factors which historically drove China’s growth have become burdensome, as Beijing’s past one-child policy has created a shortage of working age professionals. The policy, adopted in the ’70s, led to a massive working-age population with relatively few children and seniors during the 1990s and early 2000s, conditions which created an upsurge in worker productivity.

Unfortunately for Beijing, this self-inflicted population imbalance has come full circle. Between 2020 and 2035, parents subjected to China’s one-child policy in the 1990s will reach retirement age. During this time, China is expected to lose 70 million working-aged people and gain 130 million senior dependents. Current projections estimate that age-related social spending must triple by 2050 to accommodate this growing imbalance.

China leveraged this surplus of labor in the wake of its one-child policy by producing cheap goods and services for Western markets. Today, however, Chinese manufacturing jobs are rapidly evaporating, as foreign corporations move factories to nations with cheaper labor. As Beijing can no longer rely on abundant cheap labor, it will be necessary for the nation to evolve into a high-skill-intensive economy. Worryingly, the nation’s workforce is largely uneducated, as only 30% of Chinese workers possess a high school education, meaning the nation’s shrinking workforce largely lacks the reading, math and computer skills necessary to support a high-tech economy. China’s path to becoming the world’s dominant economic superpower is uncertain, as the nation’s efforts to modernize in the face of demographic challenges may fail due to self-inflicted labor shortages.

China aims to overcome these vulnerabilities and fund its age-related expenditures by investing in automated labor. Shipments of industrial robots to China increased by 45% in 2021 and China is expected to employ 3–4 million robots in industrial sectors by 2030. However, Beijing may not automate quickly enough to outpace its aging workforce, as the Biden administration has worked to bar China from purchasing crucial semiconductor chips. Some policy experts predict that such a move could set China back ten years technologically, an eternity for a nation seeking to modernize at a breakneck pace.

Once seen as an unstoppable rising force, China’s economy could stagnate if the nation cannot supply enough skilled labor — either human or automated — to evolve into a technologically driven system. Although many scholars consider China to be a “rising power,” its precarious economic future means the nation should be considered a “peaking power.” If the nation’s steps to automate don’t pay off, China may take higher-stakes gambles to maintain its upwards trajectory. For example, Beijing may attempt to fulfill its long-held goal of recapturing the breakaway island of Taiwan, which possesses a monopoly on semiconductors that are critical for China’s future.