A Happy New Year to our Readers. Before Christmas we published three blogs based on a report to the European Commission by SAMI and a consortium of partners, IFOK, Cadmus, and Teknologi Radet, to develop a system for using foresight to develop EU R&I policy. The first blog described four global scenarios for 2040. The second looked in more detail at one global scenario – the one that most closely reflects the current state of the world. The third in the series described how the scenarios can be kept up to date. We now offer a series of ten blogs which will look in turn at scenarios for each of the regions covered by the study. The ten regions are:
China;
Japan, South Korea & Taiwan;
ASEAN;
India & its Neighbours;
Australia & New Zealand;
Russia & Central Asia;
The Middle East & North Africa;
Sub-Saharan Africa;
Central & South America; and
United States, Canada & Mexico. The original Report is available here and the original scenario reports for each Region can be found within Chapter 3 of the report. The Report was published in autumn 2021, but we continue to monitor developments and trends in each of the ten Regions. So these blogs, rather than simply recycling the content of the Report, will look at the trends and drivers that might influence how each Region might move across the scenario “board” over the next 20 years.
What Might Drive Change in China?
Demography
The EU/SAFIRE Report envisaged that by 2040 China would be firmly established as a global superpower, both militarily and economically. However, China would be wary of its potential rivals, notably the USA and India, and faced unavoidable challenges in the form of demographic change, environmental and climate pressures, and competition from other economies.
China’s demographic trends are somewhat uncertain. In 2015 the Ministry of Health and Family Planning reported that China’s Total Fertility Rate (TFR) was between 1.5 and 1.6. However the latest data from the National Bureau of Statistics (NBS) suggested that China’s TFR might be much lower, just 1.05%. The statistics on the number of births supports the impression of a reducing fertility rate. There were 11.5% fewer births in 2018 than in the previous year. Cities tend to have lower TFRs than rural areas: Beijing’s TFR is 0.69, according to the 2000 census; and Xiangyang district of Jamusi city has a TFR of 0.41, which is the lowest TFR recorded anywhere in the world since records began. The highest TFRs are in the region of Tibet.
At the same time, Chinese people are living longer. About 12% of the population is aged 65 or older. Since 1949, life expectancy has more than doubled. Deaths from infectious diseases have reduced dramatically, while the afflictions of affluence – cancer, strokes, heart attacks – are increasing among the aging population. This presents a challenge for China – meeting an increasing need for pensions, and increasing health care costs as the population ages.
China’s advances in technology, particularly AI and robotics, and its parallel advances in military technology, may mean that it can assimilate the radical reduction in fertility, but it is clear that China’s population looks set to begin to reduce. If the most extreme data were to be realised, The European Strategy and Policy Analysis System (ESPAS) suggests China’s population might reduce by HALF by 2066, as well as being much older. That would obviously necessitate a massive rethink of China’s internal and global strategy.
Environment and Climate
China now accounts for a quarter of the World’s Carbon emissions. Put simply, the prospects for the achievement of global aspirations for reducing carbon emissions depend on China. The good news is that President Xi has signalled his own, and China’s, commitment to tackling the problem of climate change. China is the world ‘s leading manufacturer of renewable technology, such as solar panels and batteries. China is also anxious to reduce air pollution in its cities.
However, China also needs to keep its economy firing, despite its commitment to climate goals, and its leading role as a manufacturer of green technology. Currently it is opening scores of new coal mines. It says that the proportion of its energy generated from fossil fuels will be 25% or less by 2030. Progress towards this will have significance for the whole world, not just China. China will not want to fail to achieve such a high profile goal.
Politics and Economics
In the last few years, Xi Jinping has tightened central controls of both the Chinese system of government, and the economy. Currently his authority seems unchallenged, but that may change if the economy runs into choppy waters, or GDP growth begins to level off, as many observers believe it will.
In foreign policy, Xi has embraced an assertive brand of “wolf warrior” diplomacy, castigating China’s critics, whilst offering investment and praise to friendly states. This approach may be ripe for review. China’s neighbours and rivals have become more assertive in return, in seeking to develop alliances designed to show unity in resisting what they see as Chinese aggression. Earlier this year, Chinese rhetoric on its claim to Taiwan as part of the Chinese homeland, was intense; perhaps it is now reducing the volume; it is too soon to say, but China’s intentions will become clearer before long, and will set the tone for China’s relationships with its other neighbours.
China’s need to address its internal challenges may also lead it to prefer to tone down its overseas ambitions. Its Belt & Road investments may become more problematic because of the economic impact of the Covid-19 pandemic on actual and potential recipients of Belt and Road investment. Indebtedness is increasing sharply in much of Sub-Saharan Africa, and in other countries that are recipients of Chinese investment, eg Sri Lanka, and there have been ant-Chinese protests, and acts of violence, eg Pakistan. The combination of economic headwinds at home and abroad, and resistance to foreign influence in some places may force China to tie its investments more closely and selectively to strategic criteria.
Conclusion Turning finally to the question of where China may move on the Scenario Board, we start with China on the borderline between Oak and Willow, with entrenched interests in many areas, but open to change and innovation in others, for example in tackling climate and renewables. If China sees an economic slowdown, especially if its falling fertility rate is very severe, it might be expected initially to become more exclusionary, but if it decides that it can no longer achieve its desired status as a superpower, it may choose to re-engage with other regions on more collaborative terms. On the other hand, if China fails to achieve the necessary progress towards reducing its carbon emissions, it may find itself more isolated from other economic powers as they divert trade elsewhere, insofar as China’s size and dominance in some sectors allows them to do so China will continue to be a Great Power. Confrontation and rivalry between China and the USA might lead to both becoming more entrenched in Exclusionary scenarios, but equally might produce an opposite reaction, based on a mutual recognition of the harm a state of “Cold War” is doing. A radical breakthrough – a sort of “Nixon in China 2.0 – could lead China towards the other side of the Board, perhaps after 2030. Some signs to watch for
Any challenges to Xi Jinping’s power and prestige;
Demographic data;
Economic data, especially average incomes and pensions;
Scale of Belt & Road Project, and any signs of trouble in recipient states;
China’s attitude to Taiwan;
Progress towards decarbonisation.Written by David Lye, SAMI Fellow The views expressed are those of the author(s) and not necessarily of SAMI Consulting. Future-prepared firms outperform the average by 33% higher profitability and 200% higher growth. SAMI Consulting brings 30 years of experience delivering foresight, futures and scenario planning – enabling companies and organisations make “robust decisions in uncertain times”. Find out more www.samiconsulting.co.uk. If you enjoyed this blog from SAMI Consulting, the home of scenario planning, please sign up for our monthly newsletter at newreader@samiconsulting.co.uk and/or browse our website at https://www.samiconsulting.co.uk Featured image by ELG21 from Pixabay
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