Why nations prosper

Demographics are an indicator of the long-term destiny of a nation, and at the same time demonstrate the current mood of its citizens. Having abolished the only-child regime in 2016 to encourage families to have a second, China now even implicitly tolerates a third child across certain regions in need of population growth. It is, however, nigh on impossible to change the course of demographics over the short and medium term. Perfectly aware of this structural weakness in its economy, China is banking more and more on automation to alleviate this gradual decline of its workforce, but increased automation in the face of demographic decline is a complex challenge.

China seems therefore to have reached the peak of its power and the sagging of its population threatens to continue throughout this century because (according to the UN) the number of citizens of working age will have halved by 2100, while the number of Americans in their respective workforce will have increased by 15% in the same time, according to the same source. China could only be saved from this secular rough patch by a miracle of productivity, like the one it saw at the beginning of the 2000s, but this remains a hypothetical. It could also be saved by opening itself up to the world and a policy of appeasement, but this would be the antithesis of its current stance.

This is because it is in fact peace that has allowed China to ensure a certain standard of living for its citizens, having seen it only increase since the late 1970s thanks to the accession of the great Deng Xiaoping who broke the cycle of violence, instability, and even chaos that had begun nearly 150 years before and ended with the disappearance of Mao. It is cooperation and the search for compromise on the international stage and the need for peaceful relations that combined to take China’s economy from 10% of the US economy in 1995 to 66% of it 25 years later. China’s leaders would be making a monumental cockup if they were to take this staggering growth as a given, and, to paraphrase Khrushchev, to believe that history is on their side. “Whether you like it or not, we will bury you”, he told Western journalists in 1956, and the facts at the time appeared to prove him correct, with the Soviets’ GDP going from 30% to 60% of the US economy in 25 years after the end of World War II. This was until this boom turned out to be just a mirage, as the USSR’s economy slowly descended into the abyss after the 1970s, in part brought on by its irreversible demographic decline due to its citizens’ loss of confidence in its system.

May the Chinese – who are subtle and insightful – realise that such trends are very hard to combat, because the countries of yesteryear under Soviet rule are still a pile of ruins, and these populations’ incomes (including the Russians) even today struggle to reach a third of American incomes. The US owes its success story to an immigration of brilliant minds, a liberalisation of commerce and to a willingness (that is often poorly conveyed by the facts) to create a better world for itself and for other countries. Whatever the case may be, it is most often because of themselves that nations either prosper or perish.