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Europe as a Model for De-escalation on the Korean Peninsula

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Speaking as former Secretary General of the Council of Europe on de-escalation on the Korean Peninsula, on peace and security in Eastern Asia is a real challenge. For millenniums Europe itself was far away from forming unity and providing peace. On the contrary, the smallest of all continents has been the scene of many wars, some of them called the “100 years war” or the “30 years war”.

 The latter involved most of the European countries and was one of the most destructive armed conflicts in history.
Between 1618 and 1648 more than half of the European population died because of direct or indirect consequences of the fighting. In the 20th century this history of bloody conflicts culminated once again in conflicts which became global, 100 years ago Europeans started World War I and 75 years ago World War II.  Many historians dealt this year of centenary of WWI with its causes.

I dare to say that there are always the same threats to peace and security: lack of communication, stereotypes and prejudices and ignorance.
Current conflicts, in the Middle East, in Africa, but also in Eastern Europe may persuade us to repeat the saying that history gives lessons all the time, but nobody is learning them.

However there are examples where the lessons of history were not only listened to but were transformed into dialogue, mutual understanding, and at the end to friendship. One example is the process of European unification including the end of the Cold War and the fall of the Berlin Wall. But there are other, in my view exiting examples too.

E.g. South Africa, which was also divided, not in a territorial sense but inside the nation. In all these positive examples you will see three key words and principles: dialogue, reconciliation and truth.

While after World War I it were only a few people who were ready to learn the lessons,  during the World War II people started to prepare the new after-war-Europe based on a common cultural and spiritual heritage. It was in the middle of World War II, in 1943, when the famous British statesman Sir Winston Churchill surprised the listeners of his weekly radio address.
He suggested that after the war all nations of Europe including the current enemies should form a “Council of Europe” to unite the continent in peace and through cooperation.

In the aftermath of the horrors of the Second World War, the main concern of the founding fathers of the European unification was to create a system that would ensure lasting peaceful co-operation between all European nations based on common values. Unfortunately the post-war period in Europe was also marked by the political and material division of Europe with the emergence of the iron curtain.
The division, which has had a deep and traumatic impact on Europe, was characterized by an ideological confrontation between two political systems. Europe was breathing, to quote Pope John Paul II, only with one lung.
But beside this deep ideological and military rift Europe could avoid direct military confrontation, I would like to say, also because of the remembrance of the horrors of the WWII.

And in this context I have to pay tribute and bend my knees in front of the victims of the nuclear tragedies of Hiroshima and Nagasaki. Their unimaginable suffering saved the world from further tragic nuclear experiences. And the legacy of the dead or livelong suffering and handicapped people from Hiroshima and Nagasaki must be nuclear disarmament, in particular in Eastern Asia!
But before turning to East Asia and the Korean Peninsula, let me return to the European example.

An important step to overcome the rift in the common home of Europe was the conference on security and cooperation in Europe with the Helsinki accord of 1975 signed by 35 countries including the U.S. and the Soviet Union, that promotes human rights as well as cooperation in economic, social, and cultural progress. The Helsinki accord proved that Europe had still much more in common than what could divide the continent.

The OSCE – Organization for Security and Cooperation in Europe – emerged from the Helsinki Conference.
It plays an important role up to today and is covering Europe, Central Asia and North America except Mexico. Currently the OSCE is monitoring the Ukrainian crisis.  The OSCE is not unknown in East Asia as three countries of the region – Japan, Mongolia and South Korea are already partners for cooperation of the OSCE.

14 years later, 1989/1990 dramatic political but peaceful changes swept through Europe as consequence of several factors.
Michael Gorbachev’s perestroika was one of them, the collapse of centrally planned economy in the communist countries was another one. But in my view the most important factor was the people. The peoples of the countries separated from the other part of Europe by the Iron Curtain wanted to choose their governments themselves like in the Western part of Europe.

In my view it was not the end of history as proclaimed by Francis Fukuyama, no, it was the return to the better part of European history.
Central, Eastern and South-eastern Europe could join the path of peace and reconciliation which was chosen by the Western European democracies in the late 40ies and early 50ies of the last century when the Council of Europe and the European Communities were created. The Council of Europe goes back to the already mentioned courageous idea of Winston Churchill and the European Union, former the European Communities, goes back to the idea of French foreign minister Robert Schuman.
The enemies of yesterday should administrate the main resources of armament, coal and steel, together in order to make wars between them impossible.

However, there was also still mistrust among nations in the after-war-decade. And the ideas were not totally new. The Austrian aristocrat with a Japanese mother, Richard Coudenhove-Calerghi, created after the WWI the Paneuropa-movement and proposed United States of Europe.
 A programme of European Christian-Democratic Parties in the 30ies spoke about a common market, a term which is familiar to the European Union.

What was essential for the success of these ideas in the aftermath of WWII was that they were accompanied by a large movement of reconciliation or you may call it also spirit of reconciliation. Reconciliation of former enemies has been seen throughout Europe, for example between France and Germany, Austria and Italy, Germany and Poland, Russia and Germany.

This reconciliation is at the same time a prerequisite of European unification as well as a result of it. I do not dare to answer the famous question who was first the chicken or the egg. Reconciliation is taking place also in South Eastern Europe. The enemies of yesterday are sitting together in a Regional Council and are co-operating in a free trade area. I do not want to hide that there are still problems, like the functioning and complicated structures of the common state institutions in Bosnia-Herzegovina and a fair and just solution for all inhabitants of Kosovo.
There are still problems in the Caucasus and the already mentioned Ukrainian and Crimean crisis. But in the spirit of the new Europe dialogue and mutual understanding should help to solve these problems too.

What was decisive that reconciliation could take place, became reality in every day’s live of the nations concerned? These were of course several and different aspects. It needed politicians who were convinced that they couldn’t do more for the security and a live in peace for their nations than to reconcile with the neighbours and enemies of the past.

E.g. it was important for German-Polish and perhaps even more for German-Jewish reconciliation when German Chancellor Willy Brandt fell on Dec.7, 1970 on his knees in front of the monument of the heroes of the Warsaw Ghetto. And it fostered without any doubt the French-German reconciliation when President Charles de Gaulle and Bundeskanzler Konrad Adenauer met on the battle fields of WWI and when the two old men embraced each other after signing the Treaty of Elysee between their countries.

But the sustainable reconciliation happened at grass root level, when more than 8 million young Germans and French participated in the youth exchange or when Italians and Austrians worked together in the mountains of Northern Italy, 2000 to 4000 meters above sea level, to turn the trenches and shelters of WWI into mountain trails.

One may ask whether this concept can be exported or better to say, imported? The African Union, for example, followed already the model of the Council of Europe but with the goal to reach the level of integration of the European Union.
This will of course be not very easy due to different political systems in the member countries and they still face serious conflicts to overcome, may I just refer to Congo and Sudan. But the vision is already there.

The Americans have their Organisation of American states and NAFTA, the free trade zone of USA, Canada and Mexico, South America has Mercosur. In East Asia and the Pacific you will find several attempts to enhanced cooperation, from the   Regional Comprehensive Economic Partnership, the Asia-Pacific Economic Cooperation, the Shanghai Cooperation Organisation (without Japan), the South Asian Association for Regional Cooperation (with Japan as observer), to ASEAN, the Association of Southeast Asian Nations and Asian+3, with again Japan, China and South Korea on board.

To some extent these cooperation organisations or entities are still a mirror of political and ideological rifts and differences, some are already crossing ideological dividing lines, some still need some deepening of trustful cooperation.
As East and South East Asia has a history of conflicts like Europe and is still facing ideological rifts, reconciliation of former enemies and rivals should play a similar role like in Europe in order to achieve peace, stability and security for all.

When Willy Brandt fell on his knees in Warsaw in 1970 Europe was still divided, the Federal Republic of Germany belonged to the democratic West and NATO, and Poland belonged to the Communist Bloc and the Warsaw Pact.
This did not hinder Willy Brandt to apologize for the crimes and atrocities carried out by Nazi-Germany.  He demonstrated that reconciliation is possible across political and ideological boundaries.
To achieve, what is the aim of today’s conference, de-escalation in Eastern Asia and in particular on the Korean Peninsula, you need the same spirit and readiness for dialogue and reconciliation.  
On all sides you need the cognition that across existing boundaries and rifts there is much more people have in common than what could divide them. So, where to should such a cognition or recognition lead?

First of all, continue and develop what is already there, e.g. the Regional Comprehensive Economic Partnership which is in the state of promising negotiations between the member countries of ASEAN, the three additional members of ASEAN Plus Three, i.e. China, Japan and South Korea, and Australia, India and New Zealand. These 16 countries should not form an exclusive club.

They should express from the very beginning the openness for others, in particular for North Korea. It will demonstrate that economic cooperation is bringing many more advantages than military confrontation.
The same applies to already existing areas of economic cooperation between North and South Korea, e.g. the Kaesong North-South Korean industrial complex.

But there are other modalities too such as traditional arm’s-length trade and investment and processing on commission (POC) trade.
Despite all difficulties and backlashes one shouldn’t underestimate the contribution of economic cooperation to de-escalation. It was also one of the European experiences during the time of the so-called Cold War when Western and Eastern Germany developed economic ties.
Another option at East Asian multilateral level would be to follow the European example of the Helsinki process. As already mentioned it was an important contribution to security and cooperation in Europe when in 1975 35 countries from both sides of the Iron Curtain including the U.S. and the Soviet Union met for a conference.

The aim was promoting human rights as well as cooperation in economic, social, and cultural fields. Like the OSCE a Conference and in consequence an Organization for Security and Cooperation in East Asia (OSCEA) of all countries of the region including of course Russia but also the “trans-pacific” USA could be a platform for de-escalation and prevention of conflicts.  The OSCE participating states Russia and USA as well as the East Asian partners for cooperation of the OSCE could certainly help with their know-how. The organization itself will for sure assist too.
Looking to the map, OSCE and a new OSCEA would cover the northern and central part of Asia, Europe and North America, forming a kind of belt of security and cooperation.

I could also imagine that either some East Asian states bilaterally or international organisations of East Asia could organize even multilaterally youth exchange following the very successful French-German example. I am afraid that such a proposal is coming too early for North and South Korea, but I would see another opportunity that is a pressing issue for many Koreans at the same time.  
Millions of families were separated following the division of the Korean peninsula in 1945 and the 1950-53 Korean War. There have been family reunification events in the past on a relatively small scale. But many more separated families who had no contacts at all for more than 60 years are desperately waiting to see their relatives. Reassuming family reunification talks and programs would certainly be a way to better mutual understanding.

Let me come to my last proposal in a very sensitive area.
You remember that I mentioned the Schuman-Plan that stood at the cradle of the European Union, avoiding future wars by common administration of the resources of conventional warfare, coal and steel. Today’s challenge is not the resources of traditional warfare but the threat of nuclear war.  

I repeat that the legacy of the dead or livelong suffering and handicapped people from Hiroshima and Nagasaki m be non-proliferation of nuclear arms and disarmament, in particular in East Asia.

On the other hand, still some countries including North and South Korea want to use atomic energy peacefully. But it’s well known, it is not a very big step from nuclear power plant to the production of atomic bombs. The best way to overcome the mutual mistrust would be to form a nuclear community on the Korean Peninsula, administrating peaceful atomic energy together and holding the peninsula free from nuclear bombs.
Coming to the end of my intervention I would like to summarize.

It is worth to follow the European example how to create an area of peace and stability. Courageous leaders have to admit wrongdoings and crimes of the past and should see reconciliation with former enemies as the best way to provide peace and security for the own nation. Overcoming the threats of non-communication, stereotypes and prejudices as well as ignorance and based on a spirit of truth, dialogue and reconciliation inclusive cooperation on a regional level regarding economy as well as security should be intensified.

On the Korean Peninsula existing economic cooperation should be intensified with a very special solution for the nuclear power.
At grass root level the spirit of reconciliation shall be implemented through a wide program of youth exchange and on the Korean Peninsula more separated families should have the opportunity to meet. May be all this sounds like a dream.
But let me by concluding modify a word of Vaclav Havel, who said, if we don’t dream of a better Europe, we will never get a better Europe.
If you don’t dream of East Asia in peace and prosperity, of a Korean Peninsula without confrontation, you will never get it.  

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East Asia

Xi Jinping’s visit to Russia and America’s hostile policy towards China-Russia rapprochement

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The visit of Chinese President “Xi Jinping” to Russia will be organized, which will most likely take place after the end of the sessions of the Chinese Parliament, which are traditionally held annually in early spring in February of each year.

  It seems to me that the Chinese comrade “Xi” himself deeply admires Putin on a personal level.  But it seems to me that the most worrying thing about Putin himself is that China, despite the strength of its relationship with him, is also seeking to set a high price for support. For example, Beijing wants to restrict Russia’s highly lucrative arms sales to India, a sworn enemy of China across the Himalayan range on the Sino-Indian border.  Despite this, the Chinese company, Huawei, is building Russian fifth-generation networks, while Russia requires Chinese cooperation on everything from aircraft parts to currency swaps in the local currencies of the two parties.

 Relations between Russia and China, which the two sides describe as a “borderless” partnership, have gained great importance after the launch of the Russian invasion of Ukraine on February 24, 2022. While Western countries imposed unprecedented sanctions on Russia, China refrained from condemning Moscow’s military crackdown and merely emphasized the need for peace. Russian energy exports to China have increased dramatically since the outbreak of the war, and Moscow has become the single largest supplier of oil to China.  However, there are very serious limits to the pattern of “boundless” relations between China and Russia.  For now, China assures Western countries that at least it does not sell weapons or aircraft parts to Russia.  Beijing is desperate not to fall victim to the same sanctions imposed on the Russians after the Ukraine war.  So it sets limits to the relationship with Moscow.

 Beijing has so far been careful not to provide direct support that could make it vulnerable to Western sanctions over Russia’s war against Ukraine. At a summit held in September 2021 in Uzbekistan, Putin acknowledged the concerns of his Chinese counterpart “Xi Jinping”, about the situation in Ukraine.

 The visit of Chinese President “Xi Jinping” to Russia is an affirmation of Beijing’s solidarity with Russia during the continuation of its military campaign in Ukraine. This visit will show the world how close Russian-Chinese relations are.

  With China’s readiness, according to what Beijing officially confirmed, about its willingness to increase strategic cooperation with Russia against the background of the difficult situation in the whole world.  According to Chinese state media analysis.

  In a previous video call between Presidents “Xi Jinping” and Putin, it was confirmed that the road to peace talks on Ukraine will not be easy, and that China will continue to uphold its objective and fair stance on the issue, according to the official China Central Television broadcast in Beijing.

  It is expected that Russian gas supplies to China will increase after that visit.  This was confirmed by Russian President “Putin” that Russian-Chinese cooperation is increasing as a factor of stability in the international arena with Putin’s statements about the importance of continuing joint military cooperation with Beijing, to enhance regional security and work to develop it in the future.

 The visit of Chinese President “Xi Jinping” to Russia will be a joint declaration of the “borderless” partnership, which was announced between the two parties during the February 2022 summit, at the time of Beijing’s hosting of the Winter Olympics, as both sought to challenge the influence of the United States of America and pressure for a multipolar world.

  Here, Moscow and Beijing present themselves as a geopolitical counterweight to the United States of America and its other allies. Moscow and Beijing also conducted several joint military maneuvers and exercises in their nearby areas of influence, including naval maneuvers in the East China Sea, as a warning message to America and its allies about the Taiwan Strait.

  Likewise, during President Xi Jinping’s visit, China will try to increase the benefit from Russian supplies of gas to the Chinese economy, given that Beijing is the main consumer of hydrocarbons, at a time when the Europeans are trying to get rid of their dependence on Russian energy.

Here, China holds the cards when it comes to Russian gas.  Just before invading Ukraine, Putin signed an agreement with Xi to increase Russian natural gas exports to 48 billion cubic meters annually as a future deal, instead of capping a modest 4 billion cubic meters in 2020.  Russia is also planning to build a new pipeline, known as (Power of Siberia 2), which may lead to the transfer of Russian gas exports from Europe more easily to China.

 Chinese President Xi Jinping’s visit to Moscow will also reflect an affirmation of Beijing’s refusal to publicly condemn Russia’s war against Ukraine, with China instead accusing the United States of provoking Russia by pressing for NATO’s expansion to the east into the regions.  direct Chinese Russian influence.

   But on the other hand, with no indications that the conflict in Ukraine is about to end at the present time, President Xi has taken steps to distance himself from his Russian counterpart, including China’s signing of a statement during the G-20 summit, in November 2022 in Bali.  Indonesia, China, along with its other member states, reaffirmed their strong condemnation of the war in Ukraine.

 The summit that took place between President Xi Jinping and his counterpart, US President “Joe Biden”, on the sidelines of the G20 meetings, also helped ease tensions between the two largest powers in the world, as the two leaders jointly warned the Kremlin in Russia, because of a Russian statement,  About the imminent outbreak of a nuclear war against Ukraine.

 The first American comment on the event of Chinese President Xi Jinping’s visit to Russia came through a State Department spokesperson, in a statement, to express Washington’s concern about China’s alliance with Russia, in light of Moscow’s continued brutal and illegal invasion of Ukraine, according to the official American  statements.

 Here came the United States and Europe’s warning to China of the consequences of providing any military assistance to Russia in its war against Ukraine or helping it evade internationally imposed sanctions.

 Here came the joint declaration between Moscow and Beijing to continue strengthening their strategic and comprehensive partnership relations, emphasizing the rejection of attempts to build a unipolar world dominated by Washington, because that American hegemony has acquired an ugly form in recent times.  The Chinese Foreign Ministry’s response also came with an emphasis on China’s support for Russia in strengthening its position as a major power in the international arena.

During Chinese President Xi Jinping’s visit to Russia, it will be emphasized that China is ready to continue to provide mutual support to Russia on issues related to their core interests, such as:

  (Sovereignty and security, intensification of strategic coordination between the two countries, and strengthening communication and coordination in the main international and regional organizations in whose membership they participate, such as: “The United Nations, BRICS Group, Shanghai Cooperation Organization”)

  Here, Russian President “Putin” opposes any attempts by any external forces to interfere in China’s internal affairs, such as the situation in Xinjiang, Hong Kong and Taiwan, with his Chinese counterpart, “Xi”, asserting that Beijing has always made independent judgments regarding Russia, foremost of which is its war against Ukraine.

 During the visit, Chinese President “Xi Jinping” is expected to call on all parties to the conflict between Russia and Ukraine to find a peaceful solution, with the Chinese leadership willing to play a constructive role in this process. And while the Chinese government called earlier to adopt peace between Russia and Ukraine, it stressed at the same time its understanding of Russia’s security concerns, and its condemnation of the supply of weapons from the West to the capital, “Kyiv”.

  At the end of February 2022, Beijing abstained from voting on a UN Security Council resolution condemning the Kremlin’s actions regarding Ukraine.  And this is despite Washington’s pressure on Beijing to adopt a position more in line with the Western position, but China refused to take any hostile stances or measures towards Russia, which it always describes as a “strategic partner”.

 Hence, we conclude the extent of the great Chinese political solidarity with Moscow. With the increase in the overall Chinese trade movement with the Russian side, and China essentially abandoning Ukraine’s support despite their previous relations in favor of Moscow, Beijing also expanded its financial transactions with the Russians without using the currency of the dollar or the euro, and doubled future cooperation for the development of military technology with Russia while conducting the Joint Russian-Chinese military exercises in the Pacific region.   In my personal belief, the American concern itself is not from a joint official Russian-Chinese alliance, but rather the fear of the compatibility of the policies of the two countries, which follow two different authoritarian regimes according to the classification of America and the West, and oppose the world order that the United States of America controls internationally in the recent time. The two parties together may impede the ability of the United States of America to implement some of its international goals, and thus influence the American influence internationally.             

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Chinese Communist Party and the path of “high-quality development” at Guangdong Province

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A night view of Shenzhen, Guangdong province, on March 10, 2018. (PHOTO / VCG)

During the meeting of “Huang Kunming”, Secretary of Guangdong Provincial Party Committee mentioned that it is significant for Guangdong embark on a path of high-quality development fit for its own situation. According to my highly understand of China’s high-quality development and analysis to the nature of the Chinese society and the polices of the Communist Party of China regarding the development is meaning (all-round building a strong modern socialist country) and all-round rejuvenation of the Chinese nation still need to rely on development.

 With the continuous development of the Chinese economy and the deepening of reforms, China put forward a new expression of “high-quality development” for the first time at the 19th National Congress of the Communist Party of China in 2017, which indicates that China’s economy has moved from a stage of rapid growth to a stage of high-quality development.

 Changing China’s economic development strategy is an inevitable choice in line with the law of development and the demands of its development. Now, China is seeking to change its previous development pattern of relying on a large number of factors of production to focus more on quality and efficiency.  It has begun to adhere to the implementation of the new development philosophy that emphasizes innovative, coordinated, green and open development for all, and to build a new development pattern that relies on domestic trade and promotes integration between domestic and foreign trade to enable the Chinese society to complete the building of a strong modern socialist country in an all-round way, Chinese side should stick to advancing high-quality development as the top priority, as President Comrade “Xi Jinping” stressed in the report.

 High-quality development mainly depends on the economy’s vitality, innovation and competitiveness.  In order to improve these capabilities, China is accelerating the implementation of the innovation-driven development strategy, intensifying its efforts to achieve a high level of self-reliance in scientific and technological research, mobilizing forces and focusing on solving intractable problems in original and pioneering science and technology research to achieve breakthroughs in some crucial and pivotal technologies, which are guided by these strategies, China has achieved good results in manned space industry, lunar and Mars sounding, deep-sea and land exploration, supercomputers, satellite navigation, quantum information, electro-nuclear technologies, large-scale passenger aircraft, medicine, biopharmaceuticals and other fields over the past years, and joined the ranks of innovative countries in the world.

 Green development is an important symbol of the transition of China’s economy from the stage of rapid growth to the stage of high-quality development. In recent years, China has pushed the green transition to a development mode, implemented the comprehensive rationalization strategy, developed green and low-carbon industries, and advocated green consumption.

  The bright future of China’s economy stems from more flexible and high-quality development. In 2021, China calmly responded to changes in the world as well as the COVID-19 epidemic, took new steps to build a new development pattern, achieve new results in high-quality development, and achieve a good start for the 14th Five-Year Plan. China has maintained a leading position in the world in economic development and in epidemic prevention and control, accelerated the growth of national strategic scientific and technological forces, improved the flexibility of the industrial chain, continued to deepen supply-side structural reforms, and made solid progress in the green transformation of the low-carbon economy and prosperity subscriber.

  Here, with the strong leadership of the Communist Party of China, the significant advantages of the socialist system with Chinese characteristics, the technological foundation accumulated since reform and opening up, the extremely large market advantage and domestic demand potential, and with huge human capital and human resources, the Chinese economy will continue to grow steadily on the path of high-quality development, enabling China to contribute in achieving a steady and stable progress in the recovery of the global economy.

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China’s Deflating Population: The Economic Marvel in Eclipse?

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So China’s population shrank last year. I admit my first instinct was … well, isn’t this a good thing? I mean, during the entire 1960s and 1970s, global discourse misted around how the world population kept growing beyond the finite resources of this world. And how food scarcity and poverty would create a social depression. China, with a population of roughly 1.4 billion people, was specifically a focal point of population reduction strategies. After the widespread catastrophe of the Great Leap Forward, a debilitating social program orchestrated by Mao Zedong in the late 50s, China’s population was on the up and up in the following decade, to the point that the infamous ‘One-Child Policy’ was introduced in the late 70s to inhibit the burden of a growing population – and concomitant poverty. Since then, however, China has dynamically transformed into an economic powerhouse – a factory floor for global manufacturing. And here lies the answer to this population conundrum: Shrinking population in China is a problem now!

According to the data released by the Chinese government last week, China’s population contracted by circa 850,000 people in 2022; with 9.56 million births against 10.41 million deaths, it was the first time in more than half a century that deaths outnumbered births in China. The initial thought would be to blame it on the pandemic. But that would be a blinkered assumption without gauging the stunted birth rate. It was the sixth consecutive year that the number of births fell, down from 10.6 million in 2021, according to the National Bureau of Statistics. Many demographers and statisticians warned for years about a population decline on the cards, albeit much later in this decade. This presage was why the government reposed its one-child policy in 2016 and extended the limit to three children in 2021. Local governments offered tax rebates and outright cash handouts to couples having children. The source of anxiety was partly social and partly economic – or maybe socioeconomic is the correct juxtaposition.

China is a rising economic power, the world’s second-largest economy, and the strongest contender to dethrone American supremacy. But in listing all the superlatives, we sometimes forget that China is still a developing economy. Despite its phenomenal evolution from endemic poverty, its average population still earns less than the average earnings in advanced economies. And the shrinking population is a two-pronged issue that could constrict China, like other leading developing economies, into a middle-income trap.

Just by simple inference, we can judge that a declining population is also an aging population. Impressive modernity in China’s healthcare system has led to an increase in life expectancy. Meanwhile, a decades-long hiatus in birth-conducive policies and changed mores of young Chinese couples, often antipathetic to having children altogether, have led to a sharp decline in births. A combination of these factors has invited a conspicuous outcome: Shrinkage in China’s working-age population. In fact, China’s working-age population has been in decline since 2015; according to a government spokesman, it could fall to roughly 700 million (approximately 23%) by 2050. This factor would be particularly problematic for China, which has long been a competitive labor market for manufacturing heavyweights like Apple and Microsoft. But moreover, a bulging elderly population amidst falling tax receipts would pose a challenge to government finances, especially given the comparably underdeveloped social safety net programs in China. Therefore, either taxes ought to be raised sharply or state pensions to old-age dependents would hit the skids – a spartan policy dilemma either way.

We can draw apt comparisons from Japan – the world’s third largest economy – which has notoriously suffered from a lopsided aging population and accompanying anemic economic growth since the asset bubble burst of the 1990s. I mean, China’s real estate market does look like a financial crisis just waiting to happen. But post-boom Japan has tried virtually every bizarre economic strategy – from negative interest rates to yield curve control – yet has failed to spark demand-led inflation. Strangely, however, China has sustained its bustling economy on prohibitive rates of investment rather than consumer demand, which has remained relatively lukewarm due to policymakers’ reluctance to pass the complete scope of economic growth to households. Nonetheless, a contracting labor force would perhaps accelerate the exodus of manufacturing from China unless the government finds alternatives to sustain China’s unrivaled productivity levels.

We could blame China’s ‘zero Covid’ policy for strangling economic growth. It is no surprise that China’s economy grew by a modest 3% in 2022, its slowest rate in nearly four decades, barring 2020. Intermittent lockdowns and pedantic mass testing regimes cast a pall over economic activities. And higher interest rates imposed by the Federal Reserve and other central banks have dampened global demand and diluted appetite for Chinese imports. According to government officials, year-on-year Chinese exports fell by 9.9% in December. While an economic turnaround is widely expected later this year, a falling working-age population; a skyward old-age dependency ratio; and the ongoing trade tussle with the United States could cost China many more decades to supersede the American edge. However, China has been an iridescent success story, an economic miracle of sorts. And therefore, if the Chinese Communist Party (CCP) could somehow prioritize economy over national security; social reforms over governmental control; and collaboration over confrontation, I reckon China can again defy the odds and achieve its dream.

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