FP focuses laser-like on 2 things - political freedom hence rule-of-law etc and plain hard demographic realities to make its case. Ignores savings levels and ICOR type counter-arguments.Forget the BRICs. The real economies that will shake up the world over the next few decades need a new acronym.
Rah-rah aside, worth a read though I'm sceptical re FP's intentions.
On PRC, specifically, FP cries wolf in these charming words:
Oh, read it all. Could point out a 100 things that don;t add up re the rosy pictures painted for the TIMBIs or whatever but still, worth a read, IMHO.In China and Russia, demographic patterns have shifted. Their working-age populations are declining, as are exports, while still-rigid political systems stifle free thought and hamper technical advance.
[...]
It is controversial to suggest that China's enormous growth engine may slow down or stall. Some slowing is inevitable, however. From 1980 to 2010, China's labor force grew an average of 1.7 percent per year, reaping the gains of Mao's pro-natalist policies from the 1960s and 1970s. These gains accounted for about one-fifth of China's annual economic growth in these decades. In the same years, urbanization -- a key source of the increase in productivity of China's labor force, as workers moving from farming to urban manufacturing and services brought huge increases in output per worker -- grew at a rate of 4.3 percent per year, as urbanites went from 20 percent to 45 percent of China's population. Education, yet another key element in increasing productivity, underwent a similarly rapid boom. From 1998 to 2004, total undergraduate enrollment increased from 3.4 million to 13.3 million, an incredible annual increase of 25 percent per year. These trends helped underwrite GDP growth rates of 10 percent per year.
Trends cannot continue at this rate, however, and indeed they have already begun to reverse. In response to the success of the one-child policy adopted in 1978, China's labor-force growth ceased in 2010, and its working-age population will decline by 15 percent by 2040. This shift from 1.7 percent annual labor-force growth to an annual contraction of 0.5 percent will, by itself, knock 2.2 percentage points off China's annual economic growth potential over the next three decades. Moreover, urbanization -- perhaps the main driver of productivity increases -- will decline even more. The U.N. Population Division projects that China's urbanization will continue, rising from 45 percent of China's population today to 67 percent by 2040 as an additional 360 million people will be added to China's cities. As an annual rate of urban growth, though, this is only a 1.5 percent annual increase -- a slowdown of about two-thirds from the 1980-2010 rate.
As for educational growth, that too has clearly reached a limit. Twenty percent of China's college-age youth are in colleges and universities today, a remarkable number for what is still a predominantly agrarian and blue-collar economy. China announced this year that it will limit the growth of doctoral programs. The biggest concern of Chinese college graduates is that their numbers have increased much faster than the economy can employ them, as white-collar jobs are proving extremely hard to find. Thus, all the demographic drivers of China's recent productivity increase will be lacking in the future.
With demographic trends no longer so favorable to growth, China's productivity gains will have to come primarily from increasing capital per worker and technological innovation. China's leaders understand this all too well, but the prognosis is not good. A recent report by IBM on international use of the latest business technologies cited China as 83rd out of 134 countries -- India was 43rd and Brazil 58th. Authoritarian countries have never been flourishing centers for innovation; new ideas come from freethinkers who question authorities and existing ways of doing things -- hardly a welcome sight in China. The treatment of Nobel Peace Prize laureate Liu Xiaobo, as well as other artists, scientists, and journalists, indicates that freedom of expression is not on the agenda for China's leaders.
China faces other obstacles as well. Its reliance on exports to richer countries cannot be sustained in the coming decades as the economies of the United States, Europe, and Japan undergo what will likely be sustained slowdowns due to their aging and stagnating populations. Export growth to Europe has already fallen dramatically. Recognizing these changes, China's central planners are taking steps to shift the economy to a domestic consumption-driven model, but this process is unlikely to sustain double-digit growth because today's Chinese are -- relative to their Western counterparts -- much more vigorous savers than consumers. In addition, the raw materials to fuel China's growth will undoubtedly grow more expensive and increasingly have to be imported.
