Chinese Puzzle

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Two recent stories have made me wonder whether the Chinese just might be getting worried about the rise of India as a global economic power. The first is a report in The Financial Times of London (Jan. 19) that there is a craze sweeping China: English lessons! There are now upwards of 30,000 companies and organizations that teach English, outside the official school system (in which English is taught by government policy). An estimated 20 million Chinese become new English speakers each year, and a recent report suggests that China may now have more speakers of English than India.

If that is so, one of India’s major advantages in world trade, the prevalence of people proficient in the international language of business, may be surpassed by China. The second story is a report in the Washington Post (Dec. 12) that China is rethinking its notorious “one-child” policy, which has been in place for over 30 years.

That policy, ruthlessly enforced, has lowered the birthrate to 1.8 children per couple. The result is a population that is rapidly aging. It is on course to be as top-heavy in elderly people as the European countries and Japan are slated to be. It has also resulted in a population with an unnaturally high percentage of males, since many Chinese couples chose to abort their female fetuses.

Now, over the past few years the Chinese government has begun to pull back. It began to allow certain exceptions (such as cases in which both parents are only children), and toned down some of its aggressive forms of advertising the policy. But now, Shanghai has started pushing for larger families. It has replaced posters directing couples to have only one child with posters encouraging them to have two, and it has offered financial help for couples who choose to do so.

Again, the Chinese may be awakening to an Indian advantage. India’s population, unlike that of other Asian nations such as China and Japan, and the European nations, is young and in no danger of aging anytime soon. Since innovation drives economic growth, and since innovation comes disproportionately from the young, countries with aging populations face slower growth.

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