India

China and India in a demographic perspective – a giant future issue

Thursday, December 16th, 2021

In my latest blog – to be found below this article in chinaresearch.se – I summed up a number of mostly economic areas which usually are influenced by demographic developments. There exists indeed a lot of scientific evidence showing many examples of relationships between demographics and, for example, labor markets, education or social welfare.

I certainly will come back to the topic of demography in the future for focusing on different angles. Today, however, I will mainly look at the demographic outlook for China and India. Many pages could be written about this specific issue. But the limited volume for this blog does not allow for extended articles or papers.

Statistics tells a lot – despite shortcomings

We know that there often exist major difficulties for responsible authorities to count more or less exactly the number of their country’s population. Human or administrative resources may be too limited. A substantial part of the population may be migrating farmers accepting time-limited works in cities, often badly paid. Many workers also stay temporarily abroad for making (somewhat) more money – often under quite miserable conditions. We also know very well about the destiny of many refugees having left their home countries.

Consequently, we have to accept the population statistics that is available. There is no choice if demographic trends in emerging or very poor countries shall be analyzed. Foreign companies entering or making business in such a kind of country certainly want to have a population number for the country they are (interested) in. Therefore, I use to follow for my own purposes https://www.worldometers.info/world-population / – but there are many other sources as well and quite easy to find.

Important data for population statistics:

China India
Population (billion, 2020) 1.447 Trend since 2000 1.400 Trend since 2000
-yearly change 0.39 clearly decreasing 0.99 decreasing slowly
Median age 38.4 clearly increasing 28.4 increasing slowly
Life expectancy 77.5 70.4
Fertility rate 1.69 basically unchanged 2.24 decreasing slowly
Urban population (% of total) 60.8 strongly increasing 35.0 increasing slowly
Share of global population (%) 18.47 clearly down 17.7 increasing slowly

Of course, there are many more indicators and specific calculations that confirm additionally that India has more favorable demographic preconditions than China. Furthermore, China will increasingly feel the consequences of its perennial one-child policy which was relaxed only a few years ago after having applied this kind of birth control during 35 years – also having led to an increasingly uneven distribution between men and women – with negative demographic consequences.

Nobel Prize winner Amartya Sen has been talking in such a context about the “missing women” which will be a burden for China many years ahead. The continuous urbanization process will give negative contributions to demography as well since the urban female labor force increasingly seems to change or reduce their family ambitions.

Demography favors India but more (other) progress is needed – China aims increasingly at new sources of economic growth

Altogether, China’s demographic outlook does not look encouraging. But what about India? The briefly summarizing table above seems to prove that India clearly will turn out to be the winner in the future demographic race and, consequently, the country with the better growth perspectives as many analysts predict. Indeed, this outcome could come true.

At the same time, we should recognize that also India will be facing growth obstacles in the forthcoming decades. Examples of these obstacles are, for example, India’s slow political reform procedures, insufficient financial resources, shortcomings in infrastructure and lagging broad education systems, etc. As one of India’s leading economists told me a few years ago, India is primarily enforced to improve and broaden its educational system – also geographically – for visibly benefiting from the demographic advantage.

Since we do not know to what extent India will be able to improve its weaknesses – education included – it remains uncertain whether India with its comparative advantage from demography will surpass China in GDP-growth terms in the very long run. China’s ambitions for the future are clearly based on mainly good infrastructure, broad education, new technology and the obvious upgrading of private consumption to counteract the negative demographic challenges. These efforts should be observed on a regularly basis.

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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Global protectionist threats are not over

Friday, September 3rd, 2021

During President Trump’s presidency, increasing concerns about global protectionism were clearly visible. In the meanwhile, one may almost get the impression that protectionism has become a less hot topic.

However, in reality this is not the case. Many (global) companies still consider protectionism as a big or even the biggest concrete challenge beyond acute covid-19 and the current threat of overheated (asset) markets. With the knowledge we have today, this may be a realistic scenario,

The main source for the concerns about remaining or growing protectionism is the fear of further increasing nationalism. There are different signs of this.

First, there are still no encouraging signals from the U.S. pointing at more harmonization with friendly-minded countries. Rather the opposite seems to be the case when considering the American exit from Afghanistan.

Second, there is an obvious risk that future American presidential administrations will continue to apply Trump’s “America first ” policy also with friends – at least to a substantial extent – and go on conducting trade policy in the most favorable national interest of the U.S. “America first” is – of course – a kind of protectionism as well.

Third, China – as we have seen in the past – has its own definition of “free trade”. Generally spoken, China is supporting free trade when it benefits itself from such a policy. This may be a somewhat harsh description but should be more or less correct. Or differently explained: China has its own trade and FDI restrictions when it feels that its competitive position could be jeopardized by required deregulation of trade and inward FDI. According to the European Chamber of Commerce in China’s latest survey from June 2021, market access impediments were reported by 45% of the interviewed European members  (https://www.europeanchamber.com.cn/en/press-releases/3345). China’s further superpower development does not indicate a more relaxed free trade policy in the foreseeable future. However, all this is still a scenario and should not be treated as an already well-based forecast.

But check out anyway reports from World Trade Alert for getting more information about different (emerging) countries’ stance of trade policy and affected favored products (https://www.globaltradealert.org/country/95)! India is a typical country with long-time protectionism. Sure, India has been gradually opening its commercial borders in recent years – but not consequently enough (https://www.bbc.com/news/business-47857583). Historical protectionism is deeply rooted in this mega country. Watch therefore India’s trade policy in the future!

Even the EU demonstrates sometimes worrisome protectionism. In my view, the next German chancellor – representing the largest European economy – should do everything possible to convince the whole EU about the decisive need to work more ambitiously for free trade. Since trade policy is in the hands of the EU, it should speak to a global public with only one voice. The EU should act more outside its borders and not too exclusively deal with its internal issues. This includes also future relations to China.

Time to wake up!

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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Help to India – much more is needed!

Tuesday, April 27th, 2021

Just after having concluded my recent article about India’s covid-19 (B1.617) crisis, the first countries announced that they would send oxygen and other desperately needed equipment to India as soon as possible – among them the United States, the UK, Germany, France and even Pakistan.

Concerning Sweden, I read two days ago a message from the government agency MSB (Swedish Civil Contingencies Agency) that the volume of Swedish help to India ultimately depends on the situation and how much support is given by other countries. In my view, this comment is a terrifying mix of ignorance and/or cynicism. In the meanwhile, 120 respirators were promised to India which, however, does not look very generous. More should be donated by Sweden. What about oxygen generators and other stuff?

Unfortunately, too many decisions-makers outside India still do not understand the gigantic dimensions of India. Sure, each aircraft landing in India with badly needed equipment is a good deed. A good deed is also that the EU commences now putting together a common strategy and common action. Hopefully, much more is to come.

Summary – understand the size of India!

I am still missing more convincing and wholehearted efforts from the international arena. Sure, we have to welcome that the Indian tragedy has been recognized more globally. However, the following three important matters of fact should be paid attention to more clearly:

¤  India is an incredible giant country with enormous further domestic contagion risks;

¤  enormous domestic contagion risks also mean enormous global contagion risks;

¤  reflecting on the two risks mentioned above means obviously – together with the current dramatic situation – that India needs much more equipment from abroad for fighting against B 1.617 than currently on the cards. Right away!

 

Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

 

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