This week's Chronicle focus on China, with several high-profile US figures visiting the country in just a month. Secretary of State Anthony Blinken, Treasury Secretary Janet Yellen, and the recent visit of Henry Kissinger, who celebrated his 100th birthday a few months ago, are notable examples. Mr. Kissinger's 1971 China visit played a crucial role in fostering closer US-China relations. Interestingly, among these envoys, only Mr. Kissinger had the opportunity to meet with Xi and even enjoy a lavish lunch.
The following charts, though unrelated to Kissinger or Xi, are amusing.
China Fertility Rate Falling After One-Child Policy Ends
After the one-child policy was introduced in 1980 to control China's population growth, the fertility rate declined significantly from 2.7 births per woman to 1.8 over three decades. However, even after ending the policy in 2016 due to concerns about its impact on economic growth, the fertility rate continued to drop to 1.2 in 2021. In comparison, the U.S. currently has a fertility rate of 1.7, higher than the average of developed countries at 1.5. To bolster economic growth, the Chinese government implemented a three-child policy in 2021.
China Migration is Net Outflow
Various reasons can prompt individuals to relocate from one country to another, and it's uncertain whether the one-child policy directly influenced migration. However, over the past six decades, China has not experienced a single year with a net migration inflow, indicating that more people have been leaving the country than moving in.
Soaring Property Price
Possibly, property prices could be another reason. In China, property prices have become so exorbitant that someone in Beijing needs 25 years of annual income to afford a house. The real estate sector's significance is evident, accounting for over 20% of the GDP. Are most people heavily invested in property?
Decelerating Growth
Last week, China's Q2 2023 GDP growth of 6.3% YoY fell short of forecasts (7.0% YoY). While GDP figures often vary each quarter, a more revealing trend can be observed in the loan growth. Over the past decade, the loan growth has been steadily trending downward.
Stock Market Captures All
Over the past 15 years, China's stock market has underperformed with poor returns and high volatility (annualized standard deviation of 26%, compared to SPY's 16%). As a result, people are opting for property investments and speculative activities instead of building wealth in the stock market.
