The contours of the history of the twenty-first century will be largely decided by the tussle between the USA and China. The familiar situation of an established global hegemon being challenged by a rising power is being played out before our eyes.
Whether or not China is able to establish at least regional domination will depend in a large part upon the winner of the technological race: which nation will be able to harness the latest technological breakthroughs to its military, political and economic ends will be in a much stronger position than its rival. And, without being too deterministic, the technological race largely depends upon the winner of the demographic one.
According to this article in the South China Morning Post, while China has an undeniable lead in population at the moment, the USA has long-term demographic advantages which will really start to be seen in the middle of this century. The reason for China’s ability to outpace the USA in the next couple of decades is its current dwarfing of the USA’s population. With 1.4 billion people, China has over four times as many people as the USA.
Why does population matter in the technological race? Simply because the more people you have, the more research scientists and engineers you have who can develop the technologies needed to overtake your competitor. The share of GDP devoted to research in China has grown exponentially over the past 30 years and it has already overtaken the USA in terms of the absolute number of researchers.
The other benefit which a large population gives a nation is that it supplies a large domestic market which provides tech companies domestic innovation opportunities and diverse application scenarios. While the retail market in the USA is still larger than that of China, the e-commerce market in China has been larger than that of the USA since 2013.
However, there are clouds on the demographic horizon for China, thanks to its disastrous one-child policy, and indeed the clouds are closer than just the horizon. The rapid decline in Chinese birth rates and the ageing population is a concern for tech innovation. The most potent force for innovation is the group aged 25 to 44 holding college degrees or above. By 2028 this cohort in China will be larger than that of the USA and will continue t grow for nearly 20 years after that. But before the middle of the century, this group will sharply decline in China. Allied to a growing population over the age of 65, these demographic realities will act as handbrakes on China’s sustained technological innovation.
The USA on the other hand has some distinct demographic advantages in the tech world. First, its birth rate is falling, but not to the levels which China’s have sunk to. Furthermore, the USA remains a deeply attractive country for migrants. Large corporations in Silicon Valley and elsewhere attract large numbers of skilled people from around the globe, as does the USA’s engineering and computer science schools. Non-US citizens account for over 45 per cent of PhD candidates in those disciplines in the USA. A large number of those candidates will end up working in the US.
It is unclear whether China will be able to take command of the East Asian littoral and the sea lanes around it and exclude US influence in the region. But it does seem clear that China’s demographic advantages in the technology field are only in the short and medium term at best. After that, the one-child chickens will come home to roost.
Marcus Roberts is co-editor of Demography is Destiny, MercatorNet's blog on population issues.