Crippled by systemic problems, China won’t overtake the US any time soon

Within fifteen years, China will have more citizens over the age of 65 than the entire population of the United States, and that aging of the Chinese people, severely accelerated by cruel and stupid social policies in the 1950s and 1960s, has already plunged into a steep and unmanageable decline. Furthermore, China lacks the financial resources to cushion this labor shock. When Japan and the United States faced aging populations, these nations had a GDP per capita of just over $15,000. China’s GDP per capita today is about $4,000.

Things are not rosy in China, and it is time for a serious look at China’s problems.

Timothy Beardsson is a legend among expatriate financial entrepreneurs in Hong Kong. A permanent resident of Hong Kong for many decades, he is the founder of Crosby Financial Holdings, which he incorporated in 1984. Beardson’s vast investment banking empire eventually employed 700 employees in 17 cities in 14 countries, with operations stretching from Beijing to New York, with transactions of some $20 billion annually.

Having amassed estate wealth for himself and his heirs, Timothy Beardson cashed in Crosby in the late 1990s. He has now turned to writing, and Yale University Press has just published his The giant that stumbles, the threats to the future of China. This is a book that no one interested in China can afford to ignore, as Beardson speaks with the kind of authority rarely found in this part of the world: the authority of someone who has worked within the system rather than simply watching it from the halls of a university or a newspaper room.

Beardson’s thesis is easy to sum up in a single sentence: It’s simply that, contrary to much of the hoopla, China will almost certainly not overtake the United States as the world’s number one power in the 21st century because it is plagued with insurmountable problems.

Although Beardson’s ideas appear to have sparked a firestorm in Europe and the United States, where the popular media have promulgated unfounded myths about China’s growth and power, they probably won’t surprise any serious observer in Beijing or Hong Kong. In fact, it is clear to us here in Hong Kong that China does not suffer from any secret or mysterious disease. China’s problems are there for anyone to see, and perhaps Beardson’s real point is that no one is looking hard enough to see them.

These are the main obstacles facing China in the coming decades: The disastrous one-child policy of the Mao period has created a shrinking workforce and an aging population, along with vicious gender disparity that devalues ​​women to an almost unimaginable degree. Combine this with catastrophic environmental degradation, a dangerous environment of radical Islamism lurking around its borders, a dwindling supply of clean water, an academic and business culture that seems culturally incapable of real innovation, a wholly inadequate social safety net, a system of government that seems antiquated and stagnant, and an efficient, low-tech economy, and you quickly appreciate that China is far from becoming a serious economic, military, or cultural rival to Europe or the United States. Otherwise. China is lagging behind.

Yet amid cataloging these shocking weaknesses, Timothy Beardson also manages to paint a realistic and personal picture of China’s magnificent history, integrity as a nation, and significant achievements over the millennia. Having learned his lessons the hard way (losing money when he was wrong), Beardson is more interested in hard analytical assessments than the kind of pabulum one gets all too often in magazines and newspapers.

Perhaps even more devastating than the historical roots of China’s problems is the utter inadequacy of current policy responses. China is famous for its five-year plans, but in Beardson’s opinion, no one at the top of the Forbidden City is seriously charting a path out of this forest of trouble.

This book is very necessary. So many recent articles have heralded China’s rise to global supremacy that many casual observers have begun to believe the myth. Beardson breaks these wildly wrong predictions. China will have to come to terms with its daunting challenges, the sheer weight and number of it, before it can achieve anything resembling its supposed ambition to become “Number One.”

Immodest visions of China’s imminent spectacular success were perhaps spurred by the financial crash of 2008, leading many experts to suggest that Europe and the United States had peaked and perhaps even reached a downward tipping point, and that China was moving closer not just to catch up but to overtake the West. That is not going to happen, not today, not tomorrow, not at any time in the foreseeable future.