China will fail - Why China is NOT the next superpower? | Collapse of China | Geopolitics China USA
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Will China become the next superpower? All news bulletins are saying that it will. In this video, I’ve tried to present a different case. In my estimate, China will NOT become the next superpower for a variety of reasons. I’ve tackled this topic in 3 parts - What is a superpower, What is China struggling with at the moment, and what it means to the rest of the world? A superpower can be defined in 3 ways - Economic power, Military power, and political power around the world.
Talking of China’s economic power - It has grown at the rate of roughly 9% since 1978, which means that the GDP has grown by 9% per year over the last 45 years. The average GDP growth rate of the US in the last 45 years has been 2-3%. Because of this, there are predictions that China will overtake the US in the next few years. What happened in 1978 that changed the economy of China so much? In 1978, the Chinese government introduced economic reforms which led to a heavy influx of foreign investment into China. Privatization was also allowed after these reforms. Before 1978, China was a closed country.
These are similar to the LPG reforms of 1991 done in India. What else is responsible for China’s magnanimous growth? One is globalization. When the tech which the rest of the world already had access to was introduced into China, it skyrocketed overall productivity. About 48% of the growth that happened in the last 45 years is attributed to an increase in productivity. The cheap labour available in China also drove the insane growth it has experienced in the last few years. But this labor is no longer cheap. The average age of the population in China today is 38 years.
It means that most of the Chinese population is in their 50s-60s and they can no longer contribute to the economy. And the folks who are in their 20s and 30s are also taking care of the old citizens. China is known as the factory of the world. But right now the participation of labour in this process is going down. Irrespective of what the Chinese government is doing to increase population growth, it is just not working. Also, the cost of labour is on the rise. In November 2022, there were protests in the Foxconn factory over wage issues.
These two factors combined together are adversely affecting the total productivity in China. The impact of technology in 1978 was huge because there was no pre-existing tech infrastructure. But since then a lot of progress has already been made. A high-speed railway between Beijing and Shanghai was built in 2008, now there is no scope for additional high-speed railways between these two cities. There is scope for a high-speed railway between Beijing and Tibet but it would not give the same economic impetus. So the marginal return on investment will decline.
Coming to takeaways, China has now shifted from focusing on its Economic might to focus on its military and political power. It has started the Belt & Road Initiative. China can export its excess reserves of cement and steel to the 150 countries where it is investing. In this way, China can use its economic surplus to create a geopolitical advantage for itself. China can export to these 150 countries if the West refuses to buy from China. China has not been in an active war since the 1979 Vietnam War. If we consider the recent Russia-Ukraine war because despite being a military superpower, Russia is facing a lot of resistance in Ukraine. After this, I shared my view of what may happen next in China. Hope you liked this video and found it valuable.
About Me
I publish meaningful and valuable content on this channel. My aim is to make business news more accessible and easy to grasp. If you find my videos informative and insightful then make sure to subscribe and leave a comment. I’ll see you in the next video
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Chapters
0:00 - Intro
0:32 - What is a superpower?
1:30 - Economic Reforms 1978
2:17 - Globalization & Productivity
3:02 - Labour & Wages
4:22 - Impact of Technology
5:30 - Political Power
7:06 - Military Power
8:17 - Outro
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