Four Reasons Why China Will Dominate Eurasia

China People

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On 26th December, 2011, the world will mark the 20th anniversary of Soviet Union’s dissolution. During last 20 years, the international system has morphed from a bi-polar order into a bi-polar disorder. China has emerged as the new titan of Eurasia, and the Muslim-World has become more chaotic.According to IMF, China will surpass America as the leading economy by 2016. During the next 20 years, Eurasia will experience intense competition between a declining US and a rising China for influence and resource security.

There are four reasons why China will dominate Eurasia:

1. Demographic Momentum

Despite all the brouhaha and misinformed punditry over China’s one-child policy, China’s fertility rate is still 1.77 children/woman, not 1 child/woman. The one child policy is strictly enforced mainly in urban coastal China. In rural, central and western China, a second and even third child is permitted.

During the last decade, annual births in China averaged 16.5-Million babies/year. Compare this to Japan (1.1 Million), Korea (0.5 Million), Taiwan (0.2 Million) and Russia (1.4 Million). Only poverty stricken Indian-Subcontinent (36 Million/year) and ASEAN (12 Million/year) are propagating faster than China.

China is giving birth to one Canada every 2 years, while Indian-Subcontinent is doing it every year. By 2030, the population aged 65+ will be only 16% in China compared to 32% in Japan, >25% in EU and 20% in US and Russia. 

China’s working age population (15-64 years) comprising 1-Billion will be 67%, higher than all major regions except India. per cent of young generation (0-14 years) will also be similar to or higher than all macro-economic regions except Indian-Subcontinent.

In short, China will be much younger than any other major regional market except Indian-Subcontinent.

2. Water and Energy

China will experience unprecedented urbanization during next 20 years. The urban population will rise from 50% in 2010 to 80% in 2030. China’s urbanization rate will follow South-Korea (82% Urban) and Taiwan (80% Urban).

This will accelerate Chinese demand for clean water, housing, cars, food, fuel, and minerals. According to Citigroup, even with enormous investments, desalination and waste-water treatment will account for only 10% of global fresh water supply in 2050.

From 2010 to 2030, China’s energy demand will double and water demand will rise by 54%, but supplies will remain stagnant or even dwindle.

China’s population is unevenly distributed on its territory. The 6 inhospitable frontier provinces – Tibet, Qinghai, Xinjiang, Gansu, Inner Mongolia and Chinese Manchuria – account for 60% of Chinese territory but only 10% of its people.

90 per cent of China’s people are dispersed in 40% of its territory. Therefore, China’s effective population density is similar to that of overpopulated Japan and Indian Subcontinent.

China is on an acquisition spree for sustained supply of energy and metals from Asia, Africa and Latin America. But due to overpopulation, there is severe water and arable land scarcity.

These chronic water shortages, acute river and soil pollution, desertification and environmental catastrophe indicate that China’s burgeoning consumption will become a major source of conflicts in Eurasia.

China will divert more fresh water flowing towards Indian-Subcontinent and continental-ASEAN to quench Chinese demand. It will attempt to “lease”, buy or annex arable land and energy in Central and North Asia, and deep-sea energy in China-Sea.

Competition for water, fuel, food, and minerals to satisfy the single-largest market of 1.36 Billion Chinese consumers will be the major cause for all future conflicts in Eurasia.

3. Fertile Brides

Due to sex-selective abortions and infanticide, there are more than 32 million excess males in China under age 20. They won’t find sexual security in future. This number will grow to 40+ million in 2030. Over 30% of Chinese males in their 30s and 40s will remain single in 2030 compared to 5% in 2010.

Even if the sex-ratio for newborns improves dramatically within 10 years, the way it happened in South Korea, Chinese males will still demand brides from abroad. But neighbours in Indian Subcontinent, Vietnam and Korea are facing their own acute bride-shortage due to skewed sex-ratios.

Russia, Japan and ASEAN have excess women. But Eastern-Siberian Russians are merely 6.5 million. Among these, only 2-Million women are between 15-45 years. Out of these at best half might consider such marriages, not enough to satisfy 30-times larger Chinese demand.

Only ASEAN will be able to supply enough brides. ASEAN had 600 million people in 2010 which will grow to 740 Million in 2030. Prosperous Japan has no culture of exporting women.

Unless China attains Taiwan like fertility rate of 1.1 children/woman and a Korea like sex-ratio for newborns, the future raw material and bride shortage will exacerbate even further.

China needs vigorous implementation of public policy including “love your daughter” campaign and punitive ban on sex-revealing ultrasounds to stop female genocide. This tragic situation can easily morph into social-political crisis and military adventurism.

4. History of Hegemony

China has a history of expansionism like Middle-East, Atlantic-Europe and Nomadic Inner-Asia. Since 2nd century BC during Han dynasty, China’s neighbours have experienced either outright annexation or a tributary status for long periods of time.

These neighbours include Korea, Vietnam, Myanmar (During Ming-Era), and Central-Asia along the Silk-Road extending as far as North-Eastern Iran.

China has also warred with India (1962, during Cuban missile crisis), Russia (Since Peter the Great) and hegemonic Japan (1590s under Hideyoshi, and 1895-1945), its three near peers. If 2000 years of history is any indicator, China will seek unwelcome influence in its near-abroad.

The likelihood that China might attempt punitive action against Japan over China-Sea energy exploration and with Russia over Russian-Manchuria and energy rich Sakhalin, cannot be ruled out.

Investors in China should look out for these trends and possibilities when they make long term investment decisions. Alternatively, investment opportunities in mining, energy and water-efficiency, waste and environmental management sectors will be immense.

Advertisement/publicity companies in China who can make a compelling case for girl-child as an asset not a liability and Korea/Taiwan like fertility-rates will also do well if wise public policy decisions are pursued.