China’s Next Milestone

Manufacturing in America has a storied past.  Facing little competition immediately after World War II, our nation dominated the industry globally.  During the decades following May 8, 1945, this segment of the economy helped build America’s middle class and maintained the title of world’s largest producer of physically made goods.  For a bit, Russia was the closest competitor and then Japan from the mid 1990’s through 2006.  But then China’s population advantage began to take over as they became the second largest manufacturer before becoming the world’s largest is 2010.

Now China’s population advantage is about to push them past America in another metric.  As we welcome the new decade, the median age of citizens in the world’s most populous country is about to pass that of Americans this year.  China’s aging is coming fast, and the threat of the nation growing old before becoming rich is rising.  According projections by the United Nations, the percentage of China’s population over 65 will more than double to 25 percent in 25 years.  America is aging as well but at a much slower rate.  The same projections have the U.S. reaching the 25 percent mark more than a century from now.

Atlas has long held that demographics is a key driver to long-term economic prosperity.  Along with productivity, it paves the road for growth.  America is greying at a much slower pace than the world’s number two economy.  After decades being held by China, the demographic advantage now turns to America.  Of course, we haven’t mentioned India. But the decade is young. Perhaps that’s a tale for another day.