UPDATED: More Evidence Of Demographic Woes In China

About a week ago we ran a post based on research by SinoInsider. That study pointed to evidence that China has been fiddling with its latest census numbers to conceal very bad demographic news. The numbers presented, according to this study, may have been intended to clumsily conceal the extent of the Covid disaster in China:  Is China Jiggering It's Census Numbers? And Why? At the same time, as we've emphasized in the past, the article affirmed that China has for decades been caught in a classic demographic trap. Despite its economic and technological progress, China is growing old before it grows rich, leaving an enormous portion of its population without provision for their old age. Meanwhile the numbers of the working age population continue to drastically shrink. Even worse, the birth rate among the working young also continues to fall, despite belated efforts to increase the number of births. That guarantees that the imbalance will only grow much worse in the future.

Today Fox News carries a story that, most likely, few will notice. Nevertheless, it's an important story as an indicator of how aware the PRC is of the scope of its demographic problem and of the dangers involved for China's future:

Pension Plunder And The Fed

Recently in a comment I mentioned that, while I don't draw on Social Security, I feed at the public trough by other means--my Civil Service annuity. In this way you readers support my life of relative leisure, devoted to discussing moot matters. In my defense, I work hard at this, but that doesn't change the fact that the general public doesn't get a choice--even if the individual contributions to my annuity are miniscule. 

Call it belated pangs of conscience--I never thought of these things when I was in my 20s and I'm not sure what I could or would have done differently. I think these considerations first came home to me when the federal government switched retirement systems from CSRS to FERS and tried to talk legacy folks like myself into making the switch voluntarily. Without running the numbers I knew that the switch would not be a good deal for me--even though I was nearly buried under mortgage and private educations expenses at the time.

At any rate, my comment "triggered" a reader to write a lengthy and thoughtful email that addresses these matters in a big picture way. I've brooded on these issues in a disorganized way over the years, as I'm sure the rest of you have as well. It's about our children and grandchildren.

Here is that email, with some slight editing:

Has China's Existential Crisis Come Five Years Early?

Guess what? I'm not an economist! Nevertheless, I urge you to read Zerohedge's article on China's forthcoming census report. The short story is this: While everyone knew that within the next five years China's overall population--which is already rapidly aging--would actually begin to decline, it's being reported by the Financial Times that that process began last year. 

Population decline in a country attempting to overtake the US economically and as a major strategic competitor is a very big deal, because it exacerbates already existing structural weaknesses:

Deflation Threat Looms As China Suffers First Population Decline Since 1949

China is battling not one but three vicious demons. The interconnected issues of insurmountable debts, deflation, and demographics threaten to sap the world's future growth potential. 

Fending off the 3 D's: debts, deflation, and demographics requires the People's Bank of China to slash borrowing costs and unleash an enormous amount of credit into the local economy to cover up the faltering demand that usually persists with demographic challenges.

The question we should be asking is China really on the "rise," as President Xi Jinping believes ...

Many of us will remember the good old days of Japan Inc., back in the 80s, and that's exactly the parallel that analysts are drawing to the bind the Chinese find themselves in. As Japan Inc. discovered, battling two vicious demons--debt and deflation--is bad enough, but when demographic collapse is added into the equation everything gets worse. The problem for China is that, despite the perception of China as a modern economic powerhouse, it is actually nowhere near as advanced as was Japan. In particular, China has a vast poor and aging work force population--and no definite plans in place to provide for their old age.