Fifteen years from now, China will have more citizens over the age of 65 than America has total population, and that aging of the Chinese people, grievously accelerated by cruel and stupid social policies in the 1950s and 1960s, has already nose-dived into a steep and impossible to manage decline. Further, China lacks the financial resources to cushion this labor shock. When Japan and the United States faced an aging population, these nations had per capita GDP of something over $15,000. China’s per capita GDP today is about $4,000.
Things are not rosy in China, and it’s time for a serious analysis of China’s problems.
Timothy Beardson is a legend among expatriate financial entrepreneurs in Hong Kong. A permanent resident of Hong Kong for many decades, he is the founder of Crosby Financial Holdings, which he incorporated in 1984. Beardson’s vast investment banking empire came to employ 700 staffers in seventeen cities in 14 nations, with operations stretching from Beijing to New York transacting some $20 billion of annual business.
Having accumulated dynastic wealth for himself and his heirs, Timothy Beardson cashed out of Crosby in the late 1990s. Now he has turned to writing, and Yale University Press has just published his Stumbling Giant, The Threats To China’s Future. This is a book no one who is interested in China can afford to ignore, for Beardson speaks with the sort of authority one rarely finds in this part of the world: the authority of one who has worked within the system rather than simply observed it from the halls of a university or newspaper city room.
Beardson’s thesis is easy to put into a single sentence: It is simply that, contrary to much of the hoopla, China will almost certainly not overtake the United States as world’s number one power in the 21st century because it is beset with insurmountable problems.
Though Beardson’s ideas seem to have set off a firestorm in Europe and America, where unfounded myths about Chinese growth and power have been promulgated by the popular media, they will probably not shock any serious observer in Beijing or Hong Kong. Indeed, it is clear to us here in Hong Kong that China is not suffering from any secret or mysterious illness. China’s problems are right out there for anyone to see, and perhaps Beardson’s real point is that no one is looking hard enough to see them.
Here are the main obstacles China faces in the coming decades: The disastrous one-child policy of the Mao period has created a shrinking labor force and an aging population, coupled with a vicious gender disparity that devalues women to an almost unimaginable degree. Meld this with catastrophic environmental degradation, a dangerous environment of radical Islam lurking around its borders, a shrinking supply of clean water, an academic and business culture that seems culturally incapable of real innovation, an utterly inadequate social safety net, a system of government that seems dated and ossified, and a predominantly low-tech economy, and you will quickly appreciate that China is far from becoming a serious economic, military, or cultural rival to Europe or America. On the contrary. China is falling behind.
Yet in the midst of cataloging these shocking weaknesses, Timothy Beardson also manages to paint a realistic and personal picture of China’s magnificent history, integrity as a nation, and significant achievements over the millennia. Having learned his lessons the hard way (by losing money when he was wrong) Beardson is more interested in hard analytical assessments than he is with the sort of pabulum one too often gets in magazines and newspapers.
Perhaps even more devastating than the historical roots of China’s problems is the utter inadequacy of current policy responses. China is infamous for its five-year plans, but in Beardson’s view, no one at the top in the Forbidden City is seriously charting a path out of this forest of problems.
This book is much needed. So many recent articles have heralded the rise of China to global supremacy that many casual observer have started to believe the myth. Beardson smashes these wildly mistaken predictions. China will have to come to terms with its daunting challenges, their sheer weight and number, before it can achieve anything like its alleged ambition to become “Number One.”
The immodest views of China’s impending and spectacular success were perhaps abetted by the 2008 financial collapse, which lead many pundits to suggest that Europe and the United States had peaked and perhaps even hit an inflexion point leading downward, and that China was zooming up not only to catch up but to surpass the West. That’s not going to happen — not today, not tomorrow, not any time in the foreseeable future.