By 2035, China will lag behind the U.S. in every demographic metric, and its GDP growth rate will likely fall below America’s.
Chinese President Xi Jinping recently sought to assure a bipartisan delegation of U.S. senators that China and the United States could still avoid a military confrontation despite the rising tensions between them. “The Thucydides Trap,” he said, “is not inevitable.”
The term “Thucydides Trap,” a reference to the ancient Greek historian’s account of the Peloponnesian War, was coined by political scientist Graham Allison to describe the seemingly unavoidable conflict that arises when an emerging power such as China challenges an established hegemon like the United States.
Allison argued that China will eventually overtake the U.S. as the world’s largest economy, a notion bolstered by Chinese government economists who predict that the country’s GDP will be twice as large as America’s by 2030 and three times as large by 2049. Such forecasts have fueled strategic anxiety among many US politicians and scholars wary of China’s growing economic clout and geopolitical aspirations.
Allison’s thesis seems to have found a receptive audience within Chinese leadership circles. In fact, the Chinese economy’s explosive growth — GDP has skyrocketed to 76% of comparable
U.S. GDP in 2021 from 7% in 1990 — has evidently convinced policymakers in both China and the U.S. that the Thucydides Trap is indeed inevitable.
But, to borrow again from ancient Greece, these predictions fail to account for China’s Achilles’ heel: its bleak demographic outlook. An aging population can hinder production, reduce consumption, stifle innovation, undermine public morale, and erode economic vitality. In the 2007 edition of my book Big Country with an Empty Nest, I likened China’s demographic trajectory to a sprinter — quick but lacking stamina. By comparison, both the U.S. and India are marathon runners, poised to dominate the 21st century.
Japan, which I likened to a middle-distance runner, provides a cautionary tale. With a rapidly growing workforce and a young population, Japan’s GDP soared from 8% of America’s in 1960 to 73% by 1995. In 1994, however, its prime-age labor force (15-59) began to decline, and it has since trailed the U.S. by every demographic measure. Japan’s economic growth rate has been lower than America’s since 1992, and its GDP has fallen to a mere 16% that of the U.S. in 2023.
Italy’s experience underscores the danger of ignoring demographic shifts.
Italy’s experience underscores the danger of ignoring demographic shifts. The country’s prime working-age labor force has been shrinking since 1993, and its population is significantly older than that of the U.S. Consequently, its GDP has dropped from 20% of America’s in 1992 to 8% this year.
China’s population aged more rapidly than previously predicted, and its fertility rate (births per woman) has been lower than that of the U.S. since 1991 and below those of Japan and Italy since 2021. China’s prime-age labor force began to shrink in 2012, signaling the end of its three-decade run of double-digit GDP growth.
In the decade since then, the gap between the Chinese and U.S. economies continued to narrow, partly owing to China’s massive housing bubble. But by 2031-35, China will lag behind the U.S. in every demographic metric, and its GDP growth rate will likely fall below America’s. Chinese GDP has fallen from 76% of America’s in 2021 to 66% in 2023. While this decline is likely the result of short-term fluctuations, it could foreshadow a widening economic divide between a rapidly aging China and a largely middle-aged U.S.
Source : Market Watch
