China: Gradually, now suddenly

MUCH of the current China focus is on the economic challenges brought by the pandemic. We expect China to record growth near 5 per cent this year as restrictions ease and stimulus gains traction. But its structural shifts have fundamental and far-reaching implications.

There are several instances of economies beset by apparent short-term shocks that ended up being lasting economic changes: Neither Australia after the 2000s boom nor Japan after its bubble burst in 1991 returned to previous rates of growth.

The pandemic could well be such a catalyst for China.

Demographics

China’s demographic challenges have been building for some time. It has 50 per cent more 40- to 59-year-olds than those under 19 years. Some studies suggest a halving in China’s population by the century’s end. China’s working-age population peaked in 2014, and the pandemi…

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