Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Economy
In reply to the discussion: Weekend Economists Hail to the King January 9-11, 2015 [View all]Demeter
(85,373 posts)61. IMF sees 140m jobs shortage in ageing China as 'Lewis Point' hits FEB 2013By Ambrose Evans-Pritchard
http://www.telegraph.co.uk/finance/comment/9845959/IMF-sees-140m-jobs-shortage-in-ageing-China-as-Lewis-Point-hits.html
We can now discern more or less when the catch-up growth miracle will sputter out. Another seven years or so (2020) - enough to bouy global coal, crude, and copper prices for a while - but then it will all be over. Chinas demographic dividend will be exhausted. Beijing revealed last week that the countrys working age population has already begun to shrink, sooner than expected. It will soon go into precipitous decline, according to the International Monetary Fund.
Japan hit this inflexion point fourteen years ago, but by then it was already rich, with $3 trillion of net savings overseas. China has hit the wall a quarter century earlier in its development path. The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice. Less known is the parallel - and linked - labour drain in the countryside. A new IMF paper - Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point? - says the reserve army of peasants looking for work peaked in 2010 at around 150 million. The numbers are now collapsing. The surplus will disappear soon after 2020. A decade after that China will face a labour shortage of almost 140m workers, surely the greatest jobs crunch ever seen. This will have far-reaching implications for both China and the rest of the world, said the IMF.
Source: IMF
These farm workers are the footloose migrants that pour into the cities from the interior, the raw material of Chinas manufacturing workshops They are carefully regulated by the semi-feudal Hukuo system to keep their families tied to villages at home, and to keep the lid on social revolt. There is little Beijing can do to head off the shock. The effects of low fertility rates - and the one child policy - are already baked into the pie. It would take half a century to turn around the demographic supertanker.
The Lewis Point, named after St Lucia's Nobel economist Sir Arthur Lewis, is when the supply of workers dries up and city wages soar. It is when labour turns the tables on capital, and profits crash.
You could argue that such a process already well under way, and is why Chinese equities are trading at a third of their 2007 peak in real terms. Manufacturing pay has risen 16pc a year over the last decade in the East Coast hubs of Shenzhen, Beijing, Shanghai and Tianjin, though this slowed sharply in 2012. Boston Consulting Group says that productivity-adjusted wages were just 22pc of US levels as recently as 2005. They will reach 43pc by 2015, or 61pc for the American South. It is a key reason why General Electric, Ford, Caterpillar and others are re-shoring from China back to the US, though cheap shale gas, a weaker dollar, and shipping costs all play their part.
This is no bad thing. The world economy is rebalancing. Chinas current account surplus has fallen from 10pc of GDP to just 2.5pc.
Chinas corrosive gap between rich and poor should narrow. The GINI coefficient measuring inequality should come down from stratospheric levels, 0.61 according to researchers at Chengdu University. Yet it is also a dangerous moment for Beijing. The Lewis Point is the great test for catch-up economies, when they can no longer rely on cheap labour, copied technology, and export-led growth to keep the game going. The air is thinner at the technology frontier. Success depends on such intangibles as the rule of law and the free flow of ideas. Those that fail to adapt in time slide into the `middle income trap, and most do fail.
The Soviet Union failed. The Philippines -- richer than Korea in the 1950 -- failed. Most of the Mid-East failed. So did most of Latin America in the 1960s and 1970s, and it is far from clear that Argentina and Brazil will break free this time.
AND THE US, AMBROSE? WHAT ABOUT THE US FAILURE?
I PREFER TO THINK OF IT AS "PAUSES" AS READJUSTMENTS ARE MADE BETWEEN GENERATIONS AND CLASSES AND THE FEUDALISM/DEMOCRACY DRAMA PLAYS OUT.
2020--THAT'S WHEN THE BOOMERS (THE PIG IN THE PYTHON) PASS OUT OF THE US LABOR FORCE, TOO.
HMMMM.....
We can now discern more or less when the catch-up growth miracle will sputter out. Another seven years or so (2020) - enough to bouy global coal, crude, and copper prices for a while - but then it will all be over. Chinas demographic dividend will be exhausted. Beijing revealed last week that the countrys working age population has already begun to shrink, sooner than expected. It will soon go into precipitous decline, according to the International Monetary Fund.
Japan hit this inflexion point fourteen years ago, but by then it was already rich, with $3 trillion of net savings overseas. China has hit the wall a quarter century earlier in its development path. The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice. Less known is the parallel - and linked - labour drain in the countryside. A new IMF paper - Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point? - says the reserve army of peasants looking for work peaked in 2010 at around 150 million. The numbers are now collapsing. The surplus will disappear soon after 2020. A decade after that China will face a labour shortage of almost 140m workers, surely the greatest jobs crunch ever seen. This will have far-reaching implications for both China and the rest of the world, said the IMF.
Source: IMF
These farm workers are the footloose migrants that pour into the cities from the interior, the raw material of Chinas manufacturing workshops They are carefully regulated by the semi-feudal Hukuo system to keep their families tied to villages at home, and to keep the lid on social revolt. There is little Beijing can do to head off the shock. The effects of low fertility rates - and the one child policy - are already baked into the pie. It would take half a century to turn around the demographic supertanker.
The Lewis Point, named after St Lucia's Nobel economist Sir Arthur Lewis, is when the supply of workers dries up and city wages soar. It is when labour turns the tables on capital, and profits crash.
You could argue that such a process already well under way, and is why Chinese equities are trading at a third of their 2007 peak in real terms. Manufacturing pay has risen 16pc a year over the last decade in the East Coast hubs of Shenzhen, Beijing, Shanghai and Tianjin, though this slowed sharply in 2012. Boston Consulting Group says that productivity-adjusted wages were just 22pc of US levels as recently as 2005. They will reach 43pc by 2015, or 61pc for the American South. It is a key reason why General Electric, Ford, Caterpillar and others are re-shoring from China back to the US, though cheap shale gas, a weaker dollar, and shipping costs all play their part.
This is no bad thing. The world economy is rebalancing. Chinas current account surplus has fallen from 10pc of GDP to just 2.5pc.
Chinas corrosive gap between rich and poor should narrow. The GINI coefficient measuring inequality should come down from stratospheric levels, 0.61 according to researchers at Chengdu University. Yet it is also a dangerous moment for Beijing. The Lewis Point is the great test for catch-up economies, when they can no longer rely on cheap labour, copied technology, and export-led growth to keep the game going. The air is thinner at the technology frontier. Success depends on such intangibles as the rule of law and the free flow of ideas. Those that fail to adapt in time slide into the `middle income trap, and most do fail.
The Soviet Union failed. The Philippines -- richer than Korea in the 1950 -- failed. Most of the Mid-East failed. So did most of Latin America in the 1960s and 1970s, and it is far from clear that Argentina and Brazil will break free this time.
AND THE US, AMBROSE? WHAT ABOUT THE US FAILURE?
I PREFER TO THINK OF IT AS "PAUSES" AS READJUSTMENTS ARE MADE BETWEEN GENERATIONS AND CLASSES AND THE FEUDALISM/DEMOCRACY DRAMA PLAYS OUT.
2020--THAT'S WHEN THE BOOMERS (THE PIG IN THE PYTHON) PASS OUT OF THE US LABOR FORCE, TOO.
HMMMM.....
Edit history
Please sign in to view edit histories.
100 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
RecommendedHighlight replies with 5 or more recommendations
My Greatuncle worked for Graceland and we got a private tour when I was about 11
kickysnana
Jan 2015
#6
Debt Buyer Faces Fine and Loss of Thousands of Court Judgments By Jessica Silver-Greenberg
Demeter
Jan 2015
#7
Inside the Underground Bunker Condos Where 1 Percenters Plan to Ride Out the Apocalypse
Demeter
Jan 2015
#12
Economic Update: Real vs. Fakenomics By Richard D. Wolff, Truthout | Radio Program
Demeter
Jan 2015
#13
Vermonters Lobby for Public Bank - and Win Millions for Local Investment Instead
Demeter
Jan 2015
#14
The Dark Side Of the Jobs Report: Shrinking Workforce, Stagnant Wages DEAN BAKER
Demeter
Jan 2015
#25
The Right Tries (and Fails) to Justify Its Assault on Social Security RICHARD ESKOW
Demeter
Jan 2015
#27
Ukraine Says $450 Million Was Stolen from Its Military in 2014 | The Smirking Chimp
MattSh
Jan 2015
#40
11 Predictions of Economic Disaster in 2015 from Top Experts All over the Globe | The Daily Sheeple
MattSh
Jan 2015
#48
I'm a former DEC employee. The only limitations I see on the brochure are
magical thyme
Jan 2015
#57
one of my fears is knowing that pensions are no longer protected from bankruptcies
magical thyme
Jan 2015
#78
The role of global supply chains in the transmission of shocks: Firm-level evidence from the 2011 To
Demeter
Jan 2015
#52
Fighting Corporate Abuse of Low-Paid Workers, Trial Attorney Takes on AIG, Wins Big
Demeter
Jan 2015
#54
Why has US Oil Consumption Steadily Fallen since 2004? FROM FEB 2013 By Gail Tverberg
Demeter
Jan 2015
#60
IMF sees 140m jobs shortage in ageing China as 'Lewis Point' hits FEB 2013By Ambrose Evans-Pritchard
Demeter
Jan 2015
#61
One graph that says much about America, and our future: the growth in jobs vs. food stamp use
Demeter
Jan 2015
#62
Guess What Happened The Last Time The Price Of Oil Crashed Like This? By Michael Snyder
Demeter
Jan 2015
#63
ObamaCare “Shared Responsibility Payments” Come Due on April 15, and It Won’t Be Pretty
Demeter
Jan 2015
#73
So Maine didn't expand Medicaid last year, which would qualify some for penalty exemption
magical thyme
Jan 2015
#86
how in the eff are people in the income-based student loan program supposed to file an insurance
magical thyme
Jan 2015
#87