The clock is ticking on China, and my question is, what do we intend to do about it?
The demographic numbers are appalling for the Chinese. That nation of some 1.2 billion people has roughly 500-600 million people of an age that suggests that their death rate is going to skyrocket. It’s like that in Canada, too, with our own population top-heavy with people age 60+ making up the lion’s share of the demographic pie. But we’re not going to lose half a billion people as a result of it.
Some would argue that China’s problem is China’s problem, and while certainly tempting, there’s a bit more to it than that. Right now, China produces about half of the world’s finished products, at least from a total value perspective. Halving your national population cut in half through natural aging will have an impact on that, for sure. Yes, China will still be a colossus, but the Chinese economy is scaled to the much larger population of over a billion. When you pull that 600 million people out of the equation, that means that you theoretically lose over half of your domestic market for your own finished manufactured goods, not to mention the impact that may have on your productive workforce. And the impact that all of this will have on the global economy.
An impact that will be felt right here, an ocean away, in Canada.
A lot of people don’t like the idea of Canadians purchasing Chinese products anyways, arguing that those dollars should be spent on Canadian-made products. It’s hard to argue against that, except for the fact that Canada doesn’t necessarily produce a lot of what China currently produces anyway. So when the Chinese economy collapses, which it most certainly will barring some unforeseen miracle, or an outbreak of war, who is going to be there to pick up the slack for all those products that will suddenly disappear? And all the places that are part of the supply and retail chains associated with those products?
You don’t take half the world’s manufacturing of finished consumer products off the table without having that, not trickle, but rumble through the economy here at home. Even the Buy Canada purists have something made in China somewhere in their existence. It would be almost impossible not to.
So folks here, and elsewhere, including our neighbours to the south, will face this crunch. Those same folks might view this as an opportunity for domestic companies to step into the void, make those finished products themselves, and sell them to the domestic market, Factories, jobs, money flowing through the economy, and Made in Canada, all in one shot. It’s perfect.
It’s just that there is no perfect. If it were that easy, everyone would be doing it.
Although on a different scale than China, our demographics face the same threat, just to a proportionately smaller degree, but pain is pain, and it still hurts. We don’t have enough people to fill out our workforce needs as they stand today, and immigration is a dirty word because of short-sighted government incompetence that had hundreds of thousands of people streaming into a nation that lacked the housing assets to absorb them, much less the existing population. So where will all the workers needed for these new factories pumping out domestic finished products come from? I’ve given this quite a bit of thought over the past year and I’ve come up with what I consider to be my most informed response.
I don’t know.
Canada is a resource-dependent and export economy. We have a history of pulling stuff out of the ground, or ripping it from the ground, and sending it to places like China, Japan, or Korea to be cobbled into finished goods, many of which we find right back here in Canada as finished products on our store shelves. This is the stuff that will disappear.
Some would say it’s about time we developed our own value-added industries to wean ourselves off our dependence on exporting raw materials. I agree completely. So my only question would be then, why don’t we?
Demographics are part of it. Investment capital is another. Political nervousness, or willingness a third. There is no perfect solution to this. If there’s not enough of a workforce to fill all of the domestic need for workers right now, how the hell are we going to “scale-up” our industrial plant to get our demand for finished products satisfied? One is intricately linked to the other.
We need people. But we currently don’t have enough people right now as it is. And we can’t go out and get more because the people we do have don’t want the people we need. And so we stagnate.
There’s truth behind a statement that Canada is not populated by economists who are trained to see these things and raise the alarms for the rest of us. And what economic scientists we do have are increasingly ignored by a lot of the population who have allowed themselves to fall into a perpetual state of distrust involving science generally. This distrust is fuelled by inconvenience, in that a lot of what science advises us on today gets in the way of how we want to live our lives, and the things that we prefer to believe in. As to economics generally, many of these folks have the wherewithal to believe that the World Economic Forum is a cabal of global this, that, and the other thing, all bad, all intent on leading the rest of us straight to hell. And that’s about the extent of it. They believe that immigrants steal jobs from “good” Canadians, but don’t bother with the fact that those “good” Canadians aren’t filling those jobs on their own. Pointing that out to them is inconvenient to their established sets of “facts” and “truths” and so they play the “fake news” card, since that’s the trump card in any debate where things aren’t going your way.
So what do we do?
Yes, there’s a tremendous economic opportunity here should we decide to seize it. No matter what we do, we’re still going to have trouble scaling up to the point where we can cover for the loss of all those Chinese goods in our economy, but still, we can mitigate against that, soften the blow as it were. We can create jobs, good paying jobs, and create more and more affluent taxpayers who will fund our health care and pension systems. Jobs that pay wages that allow for purchasing power for the necessities, plus disposable income to be spent on quality of life purchases and investments. It’s all roses without the thorns.
But it all comes down to the people. We don’t have enough of them as it is. And it doesn’t look or sound like we’re going to have enough to meet this demand of the future, either.
And by future, I’m not talking about our kids or our grandkids or our great grandkids. I’m talking ten years. A decade. Like literally, right around the corner.
And when the problems associated with all of this lands flush on our doorstep, the people most responsible for this will be looking to blame anybody other than themselves for it.
For those kids and grandkids, etc., I hope we get this sorted out.
NEWSMAGRENFREW 