China, the land of "a million truths" and the fastest-changing society on earth, defies prediction. But I will boldly go where no prognosticator dares to tread. Here are three definitive statements about China in the next decade.
The first: This period will be known as "China's century." China has just passed Japan to become the planet's second-largest economy, and the Chinese have big boy U.S. in their gun sights.
But China's century will be short, a few years at most, the quickest hundred years in world history. By the end of 2011 Chinese growth rates will fall from double-digit territory. Gross domestic product will begin a decade-long slide.
How can this be? After all, China now has the world's fastest-growing economy after Singapore. But super-fast growth is just a mirage. China should be following the example of the United States, which is adjusting to a world with fewer coal mines, trinket factories and handbag retailers.
Instead, the State Council, Beijing's cabinet, decided in November 2008 to use government spending to avoid the pain of adjustment. So, after pouring a cool $1.1 trillion of stimulus into its economy last year, growth reached a scorching 11.1% in the first half of this one. Unfortunately, China has too much of most things. Residential apartments? Would you believe 80 million vacant ones? That might be an underestimate. The vacancy rate in new buildings is well over 50%. In Beijing it looks like it is over 65%.
There are only two possible scenarios. There will be a property market crash--this is what would happen in almost any other country--or the central government will artificially support the market. Chinese leaders will likely choose the second path, forcing them to take steps that will lead to years of negligible growth. Think Japan post-bubble. China will out-stagnate the Japanese. By 2013 Japan will overtake China and become, once again, the world's second-largest economy.
Second, by 2015 there will be an environmental disaster producing 2 million refugees. Every season seems to produce a catastrophe of some sort. This year, China experienced the worst drought since the Ming dynasty. Some Chinese, taking their cue from starving North Koreans, scavenged wild plants as crops withered in the fields. Then came the rains, forcing some 250,000 to flee their homes during just one of the many storms.
Two million homeless from a single event? That's not such a wild prediction. The World Bank thinks there might be as many as 30 million environmental refugees in China by 2020, not from a one-off catastrophe but from the general lack of water.
Third, China will reach its population peak by 2020. Demographers now think that will happen sometime between 2025 and 2030. Yet they have consistently underestimated the deceleration of population growth. Beijing's statisticians, to their credit, have begun to admit how much they have been wrong.
China will continue to slow down. The abnormal sex ratio at birth--officially, there are over 119 males for every 100 females--will get worse. There will, in short, not be enough females. And, frankly, Chinese women in large cities, like their counterparts throughout East Asia, are rejecting centuries-old social norms and deferring childbirth or skipping it altogether. Decades of Beijing's audacious population policies--first encouraging uncontrolled growth and then clamping down hard--will take their toll.
So ditch the assumptions you currently hold about China. One decade from now, the nation will be unrecognizable.
Gordon G. Chang is the author of The Coming Collapse of China. He writes a weekly column for Forbes.
