Demography is Destiny

This post from the Telegraph may be a bit gloomy overall, but I have to admit that I too wonder whether the prospects for China are quite as bright as everyone thinks.

China's workforce will peak in seven years (the delayed fruit of the one-child policy) and then go into the steepest downward spiral ever seen by a large nation in peacetime. It will, and do so long before it is rich. This demographic implosion cannot be reversed quickly.

In addition, China is hitting some major infrastructure hurdles and higher commodity prices just as demand for their products in the rest of the world slumps. Of course, I still believe that over the long-term, the BRIC economies and other emerging markets will out-pace the US, and if they doesn't, that won't be a positive for the US either. This is also why I can imagine that some of the rises in commodity prices are sustainable over the medium term. In the short-term however, I find it very difficult not to be a bear, and not to essentially agree with the idea of a spreading slowdown that gradually engulfs everything -- the world is too linked and, more importantly, too unbalanced to avoid this right now.