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US Secretary of State Anthony Blinken (L) and Israeli Prime Minister Benjamin Netanyahu
What We’re Watching: Blinken’s Middle East chats, Erdogan’s bid to split Nordics, Peru’s early election, China offers baby incentives
Blinken meets with Middle East leaders
US Secretary of State Antony Blinken picked a volatile time to visit the region. After first stopping in Egypt to meet with President Abdel Fattah el-Sissi, the US’ top diplomat touched down in Israel on Monday, where he took part in a press conference with Prime Minister Benjamin “Bibi” Netanyahu. But Blinken’s visit comes amid a violent flareup in the long-running Israeli-Palestinian conflict. Last week, Israel carried out an operation in Jenin in the West Bank, targeting members of Palestinian Islamic Jihad in an operation that killed nine people, including civilians. Meanwhile, on Friday night, a Palestinian opened fire on Jews praying at a synagogue in East Jerusalem, killing seven. Then on Saturday, a 13-year-old Palestinian boy shot a father and son in Jerusalem’s Old City. What’s more, Israel is currently in the throes of a constitutional crisis as Netanyahu’s right-wing government seeks to dilute the power of the independent judiciary. But analysts say that the top agenda item is undoubtedly Iran. Over the weekend, Israel reportedly struck a compound in the Iranian city of Isfahan used to manufacture long-range missiles. (For more on the Isfahan attack and why Iran is feeling increasing pressure at home and abroad, watch Ian Bremmer’s Quick Take here.) It’s unclear whether the US was informed in advance about the strike, but Israeli leadership has in the past clashed with Washington over Jerusalem’s go-at-it-alone approach to dealing with Iran. As things become increasingly volatile in the Iran-Israel shadow war, Blinken presumably wants to make sure that the US is kept in the loop. On Tuesday, Blinken will meet with Palestinian Authority President Mahmoud Abbas and Israel's opposition leader Yair Lapid.
Finland sticks with Sweden, despite Erdoğan’s wedge
Many thought Sweden and Finland’s NATO accession bid was all sewn up last summer. But it requires approval from all 30 bloc members, and Turkish President Recep Tayyip Erdoğan now says he is willing only to greenlight Finland’s bid. Erdoğan’s decision to hold out on Sweden comes in the wake of outcry over a protest in Stockholm where a Quran was burned earlier this month. Despite speculation that Finland, which shares a 1,300-kilometer (810-mile) border with Russia, might proceed without Sweden, Finland’s foreign minister said otherwise on Monday. He explained that his country is willing to wait until the Swedish issue is resolved thanks to security assurances from the US and Britain. In exchange for NATO membership, Erdoğan has also demanded the two countries hand over scores of Turkish and Kurdish dissidents and stop more Erdoğan critics from seeking refuge there. Expect this standoff, which is helping Erdoğan whip up nationalist fervor at home, to continue until Turkey’s presidential election on May 14.
Will Peruvians vote this year?
Peru's Congress on Monday voted to reconsider holding an early election in October to help end violent protests that broke out after former President Pedro Castillo was impeached and removed in December 2022. So far, at least 58 people have died in the rallies, the majority of them Indigenous people from Peru's rural highlands who support Castillo. If the early election proposal is voted down, current President Dina Boluarte will likely present her own plan, which would also call for a first-round vote in October and a runoff in November. If that fails and the protests continue, Boluarte might just cave to the protesters by resigning, which would force the Congress president to call an immediate election, as mandated by the constitution. Confused? So are we. The bigger questions are whether angry Peruvians can wait several months to vote before the situation gets out of control, and what happens if it does. The only thing we do know is that 60% of Peruvians want elections ASAP and a whopping 89% of them resent how Congress is handling the crisis.
One Chinese province tries for more babies
For the first time since the 1960s, China’s population shrank in 2022, setting off alarm bells that its one-child policy (in place from 1980-2015) created a looming demographic crisis that will stunt the country’s economic growth and force older Chinese into poverty. With fewer young people to support the elderly in a country with a still underdeveloped social safety net, public officials are now scrambling for ways to encourage citizens to make more babies. Another sign of the times: Sichuan, home to more than 80 million people, has become the latest province to allow unmarried couples to register children to receive health benefits. (Guangdong province, which borders Hong Kong, has made similar changes. The city of Shanghai offered these reforms in 2021 before rescinding them within weeks.) The change, effective February 15, will allow unmarried women and men to register with local authorities to receive insurance to cover child-related medical bills and to keep their salaries during maternity leave. The debate within China that pits economic imperatives against family values has only begun to heat up.
The Graphic Truth: India set to overtake China
In the next few months, India is set to overtake China as the world’s most populous country. With 70% of its people under the age of 64, India is in a prime position to expand its workforce and economic output — and solidify its place as a global economic juggernaut. By contrast, China’s population shrank last year for the first time since the 1960s. The growing elderly demographic is causing massive concerns about Beijing’s growth prospects, forcing the Chinese Communist Party to scrap its one-child policy in recent years. We compare the two countries' population sizes since 1960 and forecasts for the next few decades.
Tributes are left at the site where an apartment block was heavily damaged by a Russian missile strike in Dnipro, Ukraine.
What We're Watching: Russia lashes out, Khan ups election ante, China's population shrinks
Russia strikes civilians, braces for long war in Ukraine
At least 40 people died in Saturday's Russian missile strike on an apartment building in Dnipro, Ukraine's fourth-largest city, authorities said Monday. It was one of Russia's deadliest attacks against Ukrainian civilians since the invasion began, as Moscow doubles down on the strategy of targeting civilians to turn the tide of the war in its favor. Meanwhile, the Washington, DC-based Institute for the Study of War on Sunday claimed that the Kremlin is preparing for a drawn-out conflict and a fresh mobilization to push back against Ukraine's military gains in recent months. What does that mean for Kyiv? That the US and its NATO allies will need to stay the course on providing weapons to keep the Russians at bay. Clearly on message, the UK on Friday announced that it would for the first time send Challenger 2 tanks to Ukraine. This might open up a can of worms within NATO: Poland wants to supply the Ukrainians with German-made Leopard tanks but has yet to get the green light from Berlin, while the US, Germany, and France have so far only agreed to give Ukraine light armored vehicles. If they all go a step further and send in the heavy equipment, Vladimir Putin will know that Ukraine's friends remain committed to its defense and are less worried about Russia escalating.
Khan keeps pushing for snap election
Pakistan’s former PM Imran Khan, who was ousted last April, continues to try to force the government into holding early elections. In his latest maneuver, the 70-year-old former superstar cricketer has managed to dissolve the assembly of Punjab province, home to about half of the country's population. According to the rules, Punjab must elect a new legislature within 90 days. As Khan is threatening to dissolve another provincial assembly soon, potentially triggering snap elections in two of Pakistan’s four provinces, he has created a conundrum for his rival, current PM Shehbaz Sharif. Should Pakistan, which is dead broke, engage in two massive — and expensive — elections now and then again at their due date in November? Or should the government just give up and let Khan have his nationwide polls immediately? Considering that Khan’s popularity has only soared since his ouster, and even more so after the attempt on his life in October, he’s probably likely to dominate the election. But nobody gets to win a vote in Pakistan without the blessing of the all-powerful army, whom Khan has been gunning for. Will the generals he’s challenged so brazenly for many months let him return to power?
Chinese population falls for 1st time in 61 years
China's demographic time bomb has exploded ... early. The population of the world's most populous country and second-largest economy dropped in 2022 by some 850,000 people to 1.41 billion — the first annual decline in over six decades. What's more, this happened a few years before authorities were bracing for due to falling birth rates (the now-scrapped zero-COVID policy made Chinese couples even less willing to have babies last year). The bad news is that an aging and shrinking population will hurt China's economy by having fewer young people entering the workforce while the state spends more on pensions and elderly healthcare. In other words, a smaller labor pool combined with a bigger fiscal burden. The good news (sort of) is that unlike rapidly graying Japan — whose population has been getting smaller since 2010 — China has only recorded a single annual drop and has time to reverse the trajectory before it becomes permanent. If there's any big country that can pull that off, that's authoritarian China, where Xi Jinping simply needs to get his people to have more kids.The Graphic Truth: US and China not making enough babies
For decades, the Chinese Communist Party was worried about overpopulation. In 1978 it told Chinese families they could only have one kid to contain the ballooning population size. But after years of restricting the number of births, China's population is now shrinking — fast. This demographic trend is a massive problem for China, currently vying to overtake the US as the world's largest economy. Meanwhile, the US population has also started to decline over the past decade. We compare their population growth rates from 1961-2020.
Why a US-China war is unlikely in 2022
The US may not have its political house in order right now, but neither does China. And that reality, explains Ian Bremmer, is what will prevent any cold or hot war between the world's two most powerful nations in 2022.
China faces several problems. Its economic engine is running out of gas, its population is aging, and its debt is out of control.
Xi Jinping will continue to stand up for Beijing’s interests at home and abroad, but his internal reform plans will demand Xi's undivided attention.
Watch this episode of GZERO World: American strife: Will US democracy survive? Fiona Hill explains post-Jan 6 stakes
The Graphic Truth: China's baby bust
Six years after China relaxed its one-child policy in place since 1978, Beijing announced this week that it will now allow parents to have three children. The ruling Communist Party, which half a century ago was worried about overpopulation, is now desperate for Chinese couples to have more babies to bolster the country's sluggish population growth rate, which has plummeted in recent years due to the rising cost of living. For Beijing, this is a very big deal, as a declining and aging population could make it very hard for the country to maintain the strong economic growth needed to rival other economic powerhouses, like India or the US. We take a look at China's population growth, fertility rate, and GDP per capita over the past 70 years.
China's uncertain future & its new three-child policy
Ian Bremmer's Quick Take:
Hi everybody. Happy post long weekend. I want to do a quick take today on China, because you will have seen that the two-child policy has now gone the way of the one child policy. It is now a three-child policy. The one child policy, when they got rid of it, didn't really move people towards faster childbearing, as education rates improve, as well improves ... demographic explosion is reduced. And it's very hard to turn that around with a pro natality policy. Very few countries around the world have been able to accomplish that. And China is clearly not one of them.
But what is interesting, first of all, the fact that Xi Jinping recognizes that his policy isn't working. And so, he's moving forward with something new. I mean, frequently in authoritarian regimes, leaders don't get good information from the people around them. And so, they don't tend to admit mistakes or pivot to policies. And then when they have problems and we have seen that in the case of China, there is a lot of overreach. We've seen that. For example, with the shutdown recently, the trade war with Australia, it didn't work really well. And very quietly, the Chinese started buying a lot of essential Australian inputs. Again, we're seeing that now on the three-child policy, but there is I think in the west, this increasing presumption. Well, we know that China is on path to being the world's largest economy, that projection is by 2028 now.
It's probably going to be kicked out 2030 because the US economy is going to grow a lot faster this year than people had previously expected. The rebound is pretty sharp on the back of last year being, of course, a major contraction while China was growing. One of the only countries, the only G20 country that was growing in 2020. Vietnam was the next largest economy. I think they're number 35 or something like that. So can show just how extraordinary China efforts to lock down the coronavirus once they admitted to it actually were. But I feel a little cautious around projections of what China is going to be doing in the next 10 years. And I'd be cautious, not because I'm much more pessimistic than everyone else is, rather I think I'm much more uncertain than the economists are. I mean, on the downside, as you see demographics in China are getting problematic quickly, they are getting much older as a middle-income country.
That means you're not going to have as much consumption. It means you're not going to have as much labor and it makes it harder to stimulate growth. And ultimately, that means the size of the economy is going to be more constrained by these demographic facts. Also, the fact that China has to invest and stimulate to a greater and greater degree for lower and lower returns. And the reason for that is massive debt, particularly massive corporate debt, that they're unwilling to address. Addressing it immediately could create a financial crisis, addressing it over a longer period of time is going to limit your levels of growth. And so as a consequence, I mean every other middle income economy out there has had to deal with the so-called middle income trap. China's is of a much greater scale. And unless the rules don't apply to them, then at some point in the next 10 years, they are likely to underperform significantly.
And that should give us some different views of what their trajectory in power is going to look like compared to that of the United States. Okay. So that's on the negative side, but on the positive side, 10 years ago, there was no one out there that thought that China could be at parity in technology with the United States in 2020, 2021. And yet in many key areas of cutting-edge technology, that is exactly where they are today. In digital currency, they're ahead. In 5G technology, they're ahead. In voice recognition, in facial recognition, they're ahead. And in some other areas, they're behind. Semiconductors, they're probably behind by about five years right now. General research in artificial intelligence and towards neuro-mapping, they're behind. Biotech, it's close. Depends on what you're looking at.
But the point is that literally in 10 years, not just because of ripping off intellectual property though that's certainly happened, not just because of leveraging access to the Chinese market to get technology transfers, though they've done that too, but also because they have, by far, the world's largest set of data that they use in a consolidated way to engage in deep learning that helps to power new artificial intelligence breakthroughs and that plus an enormous amount of money being spent on research and scientists has given the Chinese an extraordinary acceleration in their technological capabilities to the extent that within 10 years, China has gone from being no better. In fact, worse than a lot of second tier technology countries in the world, say Japan or South Korea or Germany or Canada, to suddenly being competitive with the United States, the world's technology superpower. And if we got that wrong over the last 10 years, might we be getting it wrong in the next 10 years?
In other words, are the Chinese going to suddenly stop? Are they going to reach parity and that's it, or are they going to be able to actually continue to accelerate? And in 10 years' time, might the Chinese be the dominant technology power compared to the United States on cyber, on AI, in digital currency, in key apps and in key areas where companies really matter in exploiting not only how we consume, but also our national security, the ability to defend a countries wellbeing, it's economic wellbeing, its health, it's critical infrastructure. Right now, the US and China both have massive offensive capabilities that can do massive damage to each other, have very limited defensive capabilities. There's a level of mutually assured destruction between the US and China and the US and Russia on cyber. In 10 years' time, I feel quite comfortable saying the Americans are going to continue to be able to get beyond the Russians on this issue, but the Chinese, I'm not clear on that.
What about the future of 5G? Where will they be? Even on semiconductors? Can they catch up if they invest massive amounts of money for X? What they were spending in 2019 and spent in 2020, they're intending to do a similar kind of increase in 2021. Where does that get them? Even if we shut them down from Taiwanese semiconductors, even if we shut them down, if we say, no, not just Huawei, but other key technology champions of China, aren't going to be able to get them to put export controls on. That's an enormous question. We don't know. So the takeaway here is that there is much more uncertainty around China's trajectory than people generally presume.
I would like to see that kind of discussion more infused in the foreign policy establishment in the United States and American critical allies. It is not right now, perhaps it will be over time. Maybe this quick take makes a small bit of difference. Anyway, I hope everyone is well. Avoid fewer people. We're having a good time here and it is almost summer. Be good. Talk to you soon. Wear white pants if you feel like it. We're past Memorial Day.
China has a big population problem
The world's most populous country has a big new problem: not enough babies. New census data show that at some point later this decade, the number of people living in China will start to fall.
How will that affect China's bid to overtake the US as the world's largest economy? Are there political implications for President Xi Jinping? China's leaders have so far been slow to come to grips with the magnitude of the looming demographic threat. GZERO talked with China experts at Eurasia Group to discuss the challenges ahead.
What did the latest census data show?
Childbirths plummeted by 18% in 2020, and although that was partially the result of the pandemic, it was also the fourth consecutive year of declining births. The country's fertility rate, which measures births per 1,000 women of childbearing age, remained very low at 1.3, technically above the 1.2 level from the last census in 2010, but most experts believe the earlier figures were substantially undercounted. The country's fertility rate is now one of the lowest among the world's major countries. It is also well below the 2.1 level at which a population exactly replaces itself from one generation to the next.
Other data showed that the country's working-age population (defined as those between 15 and 59) has fallen by 40 million people since 2010, and represents 63.4% of the population, down from 70.3% percent a decade ago. Meanwhile, the number of people aged 65 and above has swollen from 8.9% to 13.5% of the total population. It is expected to rise to 20% by 2025.
All this taken together, it looks as though China's population is in danger of starting to shrink soon. No one knows precisely when, but a study late last year said it could be as soon as 2027.
How did China get to this point?
The problem is rooted in the strict family planning policies that China introduced in the 1970s, which became known as the "one child policy." At the time, the country's leaders were worried that a booming population could stretch the country's resources and derail their development goals, so they limited all families to having just one child. People born before then are now hitting retirement, and there are fewer people in the younger generation to replace them.
In 2015, after decades of rapid economic growth, the government raised the cap to two children. That prompted a spike in childbirths for two years, but the effect has been wearing off because of the high cost of raising children in today's China. Housing has grown increasingly expensive in the nation's largest cities, and families are under intense social pressure to spend lavishly on their children's education to help them get ahead in life.
What are the economic implications of a shrinking population?
For decades one of China's great economic advantages was its huge and rapidly urbanizing population, which meant a massive supply of cheap labor to make and build things it can sell around the world. If that pool of labor gets smaller, that hits at the heart of the economic model that made China the second largest economy in the world. What's more, a decline in the number of domestic consumers — especially working-age consumers — would put a crimp on officials' plans to promote more spending at home to reduce the country's reliance on exports.
Meanwhile, the rapid increase in the numbers of retirees, who are living longer thanks to improvements in healthcare, will require more government spending on pensions, exacerbating the problems many local authorities are already facing with fast-rising debt loads.
Don't birth rates tend to decline in most societies as they become more prosperous?
Yes, but in China's case the phenomenon is occurring at an earlier stage of its development than in other Asian countries such as South Korea and Japan. That means Chinese citizens have less wealth to draw on in their old age and the state has built less of a safety net.
Can technology and automation pick up some of the slack?
In theory, yes. Automation provides a way out for firms dealing with rising labor costs. And while the number of new workers may be declining in China, rising education levels are translating into higher productivity per worker, which boosts economic output. But investments in technology take careful planning and may take years to yield benefits. They also threaten to create more economic and social disruptions in areas that are not well-equipped to embrace them, such as China's traditional rust belt in the northeast, which is already reeling from high unemployment, rising welfare costs, and slowing growth.
What does all this mean for Chinese efforts to project influence on the global stage?
A shrinking population does not in itself jeopardize China's geopolitical objectives. However, the burden on the economy and fiscal system may constrain the ability of the government to make investments in areas important to expanding the country's influence, including promoting clean technologies at home, building up the military, and lending to other countries.
Are officials capable of addressing these issues?
They see the challenge, but their responses so far have been incremental and scattered. Restrictive family planning policies — such as the two-child limit — remain in place, and there is no comprehensive plan to incentivize childbirths, which will require changes in education and housing policy. One reason for the dithering is that, as with all governments, Beijing has been focusing on more immediate issues, such as the pandemic and the trade war with the US. Another reason is that facing up to demographic challenges threatens sensitive political narratives in China, which focus on a bright future and improving livelihoods for the population.
In the run-up to the 100th anniversary of the Chinese Communist Party in July, there isn't the political will to confront these looming problems head on. But policy debates are heating up, especially in the wake of the latest census data, and we will be hearing much more about this issue in the months and years ahead.- The future of the Chinese Communist Party - GZERO Media ›
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