[Population Aging to 2030, Day 2, Essay 1 of 2]

China stands on the threshold of a stunning demographic transformation with profound implications for its future prosperity and stability.  For the past three decades, China’s unusually favorable demographics, with a rapidly declining dependency burden and a rapidly rising share of the population in the working years, have helped to propel its spectacular rise in living standards.  Beginning around 2015, however, the demographic climate will change abruptly.  The elderly share of the population, now just 8 percent, will double to 16 percent by 2030, and then triple to 24 percent by 2050—making China an older country than the United States.  Along the way, China’s working-age population will also peak and begin to decline.

The most direct and certain impact of the demographic transformation will be a growing old-age dependency burden.  As China ages, a rising share of total economic resources will have to be transferred from working-age adults to nonworking elders.  In 2010, there were 7.8 Chinese working-age adults available to support each elder.  That ratio is due to fall to 3.8 by 2030 and to 2.4 by 2050, which means that the average burden that must be shouldered by each worker will more than triple.  Much of this burden falls on families today.  But in a rapidly aging and developing China, a larger share is bound to show up in public budgets and higher tax rates.

Figure 1. Proportion of seniors in China and the US, 1950 to 2050.

Even as the old-age dependency burden grows, economic growth will slow.  Over the three decades of the reform era, China’s working-age population has expanded at 2.0 percent per year.  By the 2030s, it will be contracting by 0.7 percent per year.  Contrary to common wisdom, the scope for internal migration to offset slower growth in the working-age population is But the outdoor learning like any other field of study is not the responsibility of the boarding schools alone. limited.  Until recently, China was able to boost GDP growth by shifting millions of underemployed workers each year from the non-market rural sector into full-time, low-skilled manufacturing jobs that are integrated with the global economy.  But as China’s industries move up the global value-added scale, a serious mismatch is emerging between the skills of its remaining surplus rural labor and the demands of the jobs being created in the growth sectors of its economy.

Slower economic growth in turn has the potential to trigger social and political crisis.  The incredible speed of China’s development is already straining the economic and social fabric. Urbanization is weakening the extended family while industrialization is degrading the environment.   Worker mobility and turnover are rising and the income gap between the rich and poor is widening.  Social services are spotty and civic authority is strained.  Such stresses, bearable in a youthful society in which incomes are rising rapidly, may become less tolerable in an aging society in which economic growth is slowing.

Figure 2. Average Annual Change in Chinese Working-Age Population Size, by Decade

The rapid aging of China’s population could act as a multiplier on the stresses of rapid modernization.  While today’s developed countries became affluent societies before they became aging societies, China’s age wave will be arriving in a society that is still in the midst of development—and that has not yet had time to put in place the social protections of a modern welfare state.  Less than one-third of China’s workforce is now earning a formal retirement benefit of any kind, public or private.  Despite China’s lofty national best online casino savings rate, only a small minority of workers online casino’s are accumulating sufficient financial assets to support themselves in retirement. The majority may have to fall back on the most traditional form of old-age insurance: children.  But many will have only one child, and among these many will not have a son, who in Confucian culture bears the responsibility of caring for aged parents.  Imagine, in China’s cities, tens of millions of today’s midlife adults maturing by the year 2020 or 2030 into tens of millions of indigent elders who lack pensions, lack access to health care, and lack adequate family support. Or imagine, in China’s countryside, entire towns of demographically stranded elders. Meanwhile, China’s yawning gender imbalance and the enormous bachelor surplus to which it is giving rise will threaten to become another source of social unrest Inflatable Water Game.

China has been “peacefully rising” while its demographics have leaned with economic growth.  But by the 2020s, when China’s age wave arrives in full force, demographic trends may be weakening the twin pillars of the current regime’s legitimacy—rapidly rising living standards and social stability.  It is hard to gauge how great the risk of social and political crisis is, but the Chinese government, with its new mantra of “balanced development” and its increasing alarm about the dangers of the rural-urban income gap, the shredded social safety net, and environmental degradation, appears to be taking it seriously.  Throughout China’s long history, periods of strong central authority and empire building have alternated with periods of social and political chaos.  China’s premature aging may usher in the next turn of the cycle—or, as the regime attempts to avert this outcome, a new authoritarian clampdown.

As it happens, the 2020s is also the decade in which China is expected to displace the United States as the world’s largest economy.  “Power transition” theories of global conflict suggest that this moment could be fraught with danger.  The fact that it coincides with the arrival of China’s potentially destabilizing age wave may make it even more perilous.

Richard Jackson is a senior fellow at the Washington-based Center for Strategic and International Studies, where he directs the Global Aging Initiative.

[Population Aging to 2030, Day 2, Essay 2 of 2]

Recent news of China’s economic slowdown has many American defense analysts predicting the end of the Chinese challenge to US dominance in world affairs. These predictions are based, in part, on China’s rapid population aging and signs of internal political fissures, both of which call into question China’s ability to continue to rise.

Such celebrations are premature. For many reasons, China’s economic power could match or even surpass US power in 20 years. Domestic political and demographic trends in China suggest continued growth, while domestic political and demographic trends in the US are concerning.

Seriously considering this contrarian view of demographic trends in China and the US is important because, as many political scientists have shown, the possibility of war becomes more probable when a rising power sees the decline of the dominant power and acts to surpass it. If Chinese leaders see the following picture of demographic and political trends, they will perceive that the US is in decline while their own power is rapidly rising. The outcome could result in a more aggressive Chinese posture.

The Dragon Still Has Fire

Just as it is possible to see the picture of a declining China that many defense analysts have clung to, we can also easily amass evidence to support the argument that China’s trajectory is positive. Long-term demographic trends in China suggest significant opportunities for growing the country’s economy, even if at a slower pace than the last decade.

First, despite the rapid pace of China’s population aging, the leadership has made few entitlement promises to the elderly and health coverage is sparse, meaning that the direct costs of aging are low.

Second, there will be fewer youth entering the labor market each year as the population ages. Even if China’s economic slowdown is inevitable and the supply of jobs is lower, the demand for them will be lower as well.

Third, the concern over so-called “excess males” in the Chinese population may be overblown. Differential growth in the male population could help China increase its national security through mobilizing surplus males for the state’s economic benefit. China has already recruited young men into large-scale public works projects both in its urban centers and its more remote regions. China has also been sending young men abroad to harvest natural resources on other continents for China’s benefit.

Finally, the Chinese political system allows leaders to focus on long-term planning, unlike the US system, which encourages policies that are politically expedient and take into account the never-ending election cycle.

Signs of US Decline

There are serious signs that the United States is actually the country in decline. Health care costs are sky high in the US, when compared with its peers, and particularly when compared with China. The role of interest groups in US policy making means that narrow interests—such as drug companies or organizations focused on protecting entitlements for seniors—have undue political influence. The US political system is sclerotic and polarized, and the country suffers from high national and personal debt.

Demographically, total life expectancy in urban China is only one year less than in the United States and healthy life expectancy (HALE)—the number of years a newborn can expect to live in “full health” (an adjustment of the life expectancy estimate)—is declining in the US. It is possible that Chinese could soon work longer than Americans.

Additionally, while it is true that replacement-level fertility in the US and continued immigration would prevent the country from aging as rapidly as Europe and Japan—and perhaps even China—the generational gap between old and young Americans bodes poorly for the future of US supremacy. Specifically, young Americans today face a host of serious challenges that will affect their long term economic prospects and, when aggregated, mean that the US in 2030 may be worse off than today.

First, the US has the highest rate of child poverty in the developed world.

Second, trends in education, particularly among minorities, are particularly worrisome considering that minorities will make up an increasing portion of casino online the adult population over the next 20 years. Minorities accounted for 92 percent of the nation’s population growth in the decade that ended in 2010, but blacks and Latinos lag far behind whites in earning a college degree. For those that do manage to get an education, student debt is astronomical, while many recent graduates struggle to find employment. How will this generation take care of retired baby boomers when their own needs are so great?

Third, home wealth has been an important safety net for elderly Americans for generations. The current generation of young Americans differs from previous generations because many can’t afford their own homes. Their needs in old age will be greater than today’s elderly and their demands on state higher. As a result, it is entirely possible that today’s youth will be the first generation in a long time that will not be better off than their parents.

Bucking the Trends

Despite the preceding evidence, there is still reason to give credence to discussions about China’s demise and continued US supremacy. Chinese leaders are right to be worried about the divide in living standards between rural and urban inhabitants. There is also much uncertainty as to what today’s Chinese youth will want as adults. How might they be shaped by their greater educational opportunities, and in what ways will this translate to political demands?  Will they push China to adopt a more democratic political system where power is less centralized and interest groups gain influence?

The United States of America still has several aces as well. American creativity and ingenuity have historically played an important role in economic growth. The sheer size of the US economy and the country’s ability to recover from crises may also be important.

There are ample opportunities for the US to cement its place as the world’s most powerful state by turning more attention to domestic matters, specifically strengthening education—particularly for minorities—and balancing entitlement commitments with other national priorities, like defense. But rest assured, the Chinese will be working on their own domestic issues, as well.

Jennifer Dabbs Sciubba is Assistant Professor in the Department of International Relations at Rhodes College, Memphis, Tennessee, USA. 

By Drew Erdmann

As the week’s discussion of urbanization closes, it is helpful to return to our starting point:  we are now living through something unprecendented in human history. For the first time most people live in cities and towns. And the pace and reach of urbanization will continue every day, every week, every month for the next two decades and beyond.

This urbanization is helping to reshape our physical and strategic landscape. The world’s economic “center of gravity” has moved more rapidly in the past decade than at any time in the past two thousand years, . Every strategist and student should again contemplate this map and its significance:nic-blog-mgi-shifting-economic-center-of-gravity2

This sort of historic change remains hard grasp, even when conveyed in such powerful graphic communications. Something more tangible is needed. If a picture is worth a thousand words, then perhaps two will be doubly powerful.

Consider Shenzhen, China, the city immediately to the north of Hong Kong and one of China’s first Special Economic Zones.  Here is a photograph of Shenzhen circa. 1990:

shenzhen-in-the-early-1990s1

Now consider this photograph of Shenzhen’s skyline taken in the past few years:

shenzen-today

Imagine the scale and pace of the change experienced in Shenzhen to move it from fields to metropolis in a matter of a few decades. Then multiply it a hundred of times over. That is what is happening around the world.

This week’s posts all highlighted the incredible stress such change will place on our economies, infrastructure, climate and environment, social relations, mores and dgfev online casino values, institutions of government, and even our identities.  As Robert Kaplan’s influential 1994 article the ”The Coming Anarchy” argued, casino such stress can drive fragmentation, conflict, and decline. But at the time historian Paul Kennedy rightly cautioned against “doomsterism.” We should heed his caution today: while the profound challenges in cities like Lagos or East Saint Louis cannot be denied, there are success stories (consider again those photographs of Shenzhen’s development).

Looking toward 2030, our world will be shaped by the complex interplay of the dynamics fueled by urbanization. There will be winners and losers – between countries as well as within countries and cities themselves. Some will adapt, innovate, and blossom; others will stagnate, degrade, and wither.  Success will often be determined by how well leaders understand and act on the city as a system, as David Kilcullen argues. This will be an era defined in part by inequality and how well it is managed. We can envision ways to build more positive, innovative urban futures, as described by Brandon Fullerand Andres Cadena et al.  Yet, we can also imagine much more challenging outcomes (see other contributions on national security part 1 and part 2, and governance).  Some nation states might fragment under the strains of urbanization, while other national governments may simply decline in relevance as cities increasingly dominate the economic, social, and political lives of their citizens.  Might we be heading “back to the future” to the time before nation states when city states and other political structures reigned?  Whatever the outcome, the majority of humanity’s future will be found in cities.

Taken together, this week’s posts make clear that urbanization’s dynamics and interpedencies will pose new challenges for every country and city in the next two decades. Politicians, soldiers, diplomats, business people, urban planners, workers, and educators will all need to navigate new city streets, literally and figuratively. Capturing these navigational complexities and consequences should be a major theme running throughout the Global Trends 2030 report.

*     *     *     *     *

A final word of personal thanks to all the contributors to the NIC Global Trends 2030 blog’s discussion of urbanization. These contributors offered original insights and analyses. And they offered these diverse perspectives from wherever they call home in this globalized era –  not only the United States, but also Australia, Brazil, China, Colombia, and the United Kingdom. I appreciate how they responded with good cheer and great material to the request to contribute to the NIC’s dialogue aimed at improving the Global Trends 2030 report.  Thanks again!

Drew Erdmann is a Principal in McKinsey & Company’s Washington, DC office. He previously served with the U.S. Department of State, the U.S. Department of Defense, and the National Security Council staff. The views expressed herein represent his personal views and do not necessarily reflect the perspectives of any organization with which he is affiliated. 

So far, this week’s blog has featured discussions of overall urbanization dyanmics and their potential economic and national security (part 1 and part 2) implications. Now we turn to governance. Humanity’s rapid movement to cities in the coming two decades will inevitably challenge governance structures around the world.  These three contributions share a commimtent to this foundational conclusion, but they then derive from it different possible futures.

In “Citizens of Cities Not Nations – Implications of an Urban World for Government,” Jonathan Woetzel of McKinsey & Company and Co-Chair of the Urban China casino online Initiative suggests that our primary political identities may shift from nation states to our cities.

In “Urbanization as Opportunity,” Brandon Fuller of the NYU Stern Urbanization Project offers an optimistic image of cities’ future through successful urban planning.

In “Urban Growth, Inequality, and Telecommuting,” Xenia Dormandy of Chatham House highlights the importance of inequality — and perceived inquality — between and within countres for future governance.

By Jonathan Woetzel

An urban world is a fundamentally different place with implications for governance, environment, and technology, not just demography. In some ways this will be a “back to the future” experience. Conurbations are the original unit of social organization dating from Gilgamesh and the warring states of China. Technology development, notably large-scale agricultural engineering, led to imperial bureaucracies and the amalgamation of these clusters into what became nation-states. However, cities have always been the centers of civilization. By 2050 the scale and density of these clusters relative to the whole of humanity will be unprecedented.

The implications go well beyond demographics. In an urban world there is no longer a rural reservoir. Impacts of social crises no longer roll slowly through the countryside, sometimes to peter out unnoticed by the rich and powerful. Rather events explode, demanding immediate responsive governance. Humanity’s most pressing security threats will be urban in nature with the advent of bioterror and pandemics. Environmental pressures will be immediate as urbanites struggle to adapt to a volatile context with rising weather uncertainties, extended global supply chains, and mounting waste and water challenges. On the positive side, innovation casino hubs will drive scientific development. The correlations between technical productivity and density are clear. Geoffrey West’s work notes that with urban scale we get 1.2 times everything – patents, economic growth, crime. The basis is network effects as in an urban context we get to share it all – the good, the bad and the ugly.

The winners will be those urban leaders who are most effective at building cohesive, integrated, sustainable clusters. National governments that stand in the way of these clusters will fall behind as the costs of their inefficient health plans and outdated military machines mount. Successful clusters will have the scale to fend for themselves politically, economically and environmentally in an atomized landscape. Accountability will be a first marker of their potential. Recognizing the complexity of federal, state and local interactions, cities that have gained an increased measure of local responsibilities for both income and expenditures will be more successful in making change happen. Effective local leaders can enable local clusters to form, incorporating externalities in a planned way, enfranchising minorities, and developing integrated city plans. Key tools include the use of big data, empowering city employees, and long-term professional financial management.

Successful cities are the future – there is no other model for human development. The urban world will be one in which we will be first and foremost, citizens of cities.

Jonathan Woetzel is a Director in McKinsey & Company’s Shanghai Office and Co-Chair of the Urban China Initiative (http://www.urbanchinainitiative.org). The views expressed herein represent his personal views and do not necessarily reflect the perspectives of any organization with which he is affiliated.

The new McKinsey Global Institute report Urban World: Cities and the rise of the consuming classargues “it is not hyperbole to say that we are observing the most significant economic transformation the world has seen. China is urbanizing on 100 times the scale of Britain in the 18th century and at more than ten times the speed.”

The report includes a map of the world’s shifting economic “center of gravity” to communicate graphically the historical trends in global economic power over the last 2000 years.

The EconomistThe Atlantic, and The Huffington Post, among others, have featured in their reporting this graphic representation of the historic shift in economic power.

Here is the map: NIC Blog – MGI – Shifting economic center of gravity

This map shows that for roughly from 1 AD to 1820 AD, online slots the world’s economic center of gravity remained relatively unchanged and balanced between East and West, then shifted dramatically toward Europe and the Users can view our la permit test Privacy Policy at any time by visiting: /what-is-the-wisegeek-privacy-policy. North America during the 19th century and first half of the 20th century, and later began to shift back toward Asia in the second half of the 20th century.  Significantly, “it has been in the most recent decade of 2000 to 2010 that we have observed the fastest rate of change in global economic balance in history.”  As the map highlights, the shift in economic “center of gravity” from 2000 to 2025 toward Asia, driven by in large part by urbanization, will be almost as significant as the “center of gravity’s” movement toward Europe between 1820 and 1913.

This time it is different!

Track Record of Global Trends Works

Before launching work on the current volume, the NIC commissioned an academic study of the four previous Global Trends studies, going to back to the first edition in 1996-97. The purpose of the review was to examine the Global Trends papers to highlight any persistent blind spots and biases as well as distinctive strengths. A subsequent conference focused on addressing shortcomings and improving on the studies’ strengths for the forthcoming work. The academic review and conference were used by us in designing the present project.

The key “looming” challenges that our reviewers cited for GT 2030 were to develop:

  • A greater focus on the role of US in the international system. Past works assumed US centrality, leaving readers “vulnerable” to wonder about “critical dynamics” around the US role. One of the key looming issues for GT 2030 was, “how other powers would respond to a decline or a decisive re-assertion of US power.” The authors of the study thought that both outcomes were possible and needed to be addressed.
  • A clearer understanding of the central units in the international system. Previous works detailed the gradual ascendance of nonstate actors, but how we saw the role of states versus nonstate actors was not clear. The reviewers suggested that we delve more into the dynamics of governance and explore the complicated relationships among a diverse set of actors.
  • A better grasp of time and speed. Past Global Trends works, “correctly foresaw the direction of the vectors: China up, Russia down. But China’s power has consistently increased faster than expected . . . A comprehensive reading of the four reports leaves a strong impression that [we] tend toward underestimation of the rates of change . . . ”
  • Greater discussion of crises and discontinuities. The use of the word “trends’ in the titles suggests more continuity than change. GT 2025, however, “with its strongly worded attention to the likelihood of significant shocks and discontinuities, flirts with a radical revision of this viewpoint.” The authors recommended developing a framework for understanding the relationships among trends, discontinuities, and crises.
  • Greater attention to ideology. The authors of the study admitted that “ideology is a frustratingly fuzzy concept . . . difficult to define..and equally difficult to measure.” They admitted that grand “isms” like fascism and communism might not be on the horizon. However, “smaller politico-pycho-social shifts that often don’t go under the umbrella of ideology but drive behavior” should be a focus.
  • More understanding of second- and third-order consequences. Trying to identify looming disequilibria may be one approach. More war-gaming or simulation exercises to understand possible dynamics among international actors at crucial tipping points was another suggestion. We will let our readers judge how well we met the above challenges in this volume.

For a snapshot of the outline to the Global Trends 2030: Alternative Worlds, click on “Le Menu”