Make your vote count

THE PORTER REPORT - A monthly update on the business world from leading writer David Porter

- Advertisement -
- Advertisement -

As I began researching this month’s cover story on our upcoming polls (Down to the wire), I reflected on how lucky New Zealanders are with our elections.

David Porter

We are blessed with a wide variety of media that reflect a range of dissenting views. Voting is as easy as going to your nearest polling booth. Providing you are registered and all is in order, you tick a box, the votes are taken away and fairly counted. And after the nationwide result is declared there is rarely any dispute over the legality of the outcome.

But in China, becoming paramount leader of 1.6 billion people involves a high degree of intelligence, considerable ingenuity, and a sophisticated grasp of adept political manoeuvring we can barely comprehend.

Chinese president Xi Jinping and his predecessors have benefited hugely from their tightly controlled management of information, and a largely compliant media. Which is not to understate the political nous required to lead such a large nation.

But that may all soon change as demographics – so long favourable to China’s leadership – takes a turn downward. And this is key to New Zealand’s future prosperity as China assumes the role of our biggest trading partner with around NZ$40.32 billion in total trade, including $21.39 billion in exports – largely dairy, meat, and wood products – and $18.93 billion in imports, led by machinery and vehicles.

I first visited China back in the days of its early very controlled “opening” to the outside world. Beijing, the capital of what was then the world’s most populous country, slumbered at night. There was little public lighting and few cars. You could have been in a rural backwater. The predominant sound of the evening was the sibilant rubber hissing of millions of bicycle tyres as residents pedalled their way home.

Of course, that has all changed. Automotive industry production in China has been the biggest in the world since 2008 and now the streets are jammed with cars. But the issue for Deng Xiaoping and his leadership successors since has basically been a trade-off – keep the growing young population satisfied and undemanding by guaranteeing steadily increasing GDP growth and a more prosperous life.

But now the “Chinese century” is over, according to a report in online magazine Salon. Several publications have noted that what was, for previous decades, China’s key advantage — its never-ending supply of working-age labourers — peaked at almost 1 billion people in 2010.

But the next census, in 2020, revealed that for the first time since China’s economic liberalisation, the working age cohort has been decreasing. According to UN estimates this group will continue to contract, dropping to 773 million by 2050. The under-14 population will also fall over the same period. And nobody is expected to replace them.

In other words, formerly positive projections for growth are now going the other way with deaths outnumbering births last year for the first time since 1961, according to recent reports.

The fertility rate, which should be at 2.1 children per adult woman just to maintain a steady population, has slipped below 1.1. And China is a long way from gender equality as a result of male favouritism and its only recently abandoned one-child family policy. Experts suggest that the long-term outcome is that 10s of millions of men will never start their own families.

The demand for investment properties has been so high that China’s construction eruption simply cannot be reasonably compared to those property bubbles that have occurred in any other major economy. According to a Reserve Bank of Australia graphic residential gross fixed capital as a proportion of GDP is close to 20 percent in China — the comparable proportions in Australia, Japan, South Korea and the US are around five percent or less.

As well, GDP is essentially declining. According to recent reports, the Chinese economy, if measured by anything remotely approaching accuracy, won’t surpass that in the US because it simply cannot. Also bear in mind that Chinese statistics are regularly fudged. As I learnt from many years of reporting on China, the leadership tends to tell its bureaucrats what it wants its GDP growth to be and then triumphantly announces that the target has been achieved.

“The structural forces that have allowed it to grow at breakneck speed for half a century are now the same forces preventing it from continuing to do so,” notes Salon.

I can only urge my fellow Kiwis to take advantage of what we have and get out in October to make your vote count.

David Porter
David Porter
THE PORTER REPORT - A monthly update on the business world from David Porter

Related Articles