Scholar: Financial Markets, CIA Ignored Demographics, Overestimated China’s Economic Growth Potential

China ends one-child policy

A day after concerns about China’s economic slowdown rocked the global stock market, American Enterprise Institute scholar Nicholas Eberstadt said that the financial markets—and even the CIA—have for too long been unrealistically optimistic about China’s economic potential even when China’s demographics suggested otherwise.

On Tuesday’s Breitbart News Daily on Sirius XM Patriot channel 125, Eberstadt told host and Breitbart News Executive Chairman Stephen K. Bannon that there is “a gradual awakening to the reality that the new contours aren’t going to make possible this seven percent year-on-year-on-year-on-year-on growth that our CIA and international financial markets and Chinese planners thought was going to be the basis for the Asian Century.”

“I don’t think it’s going to happen because they don’t have the human ingredients for it,” he said.

Regarding China’s one-child policy that former Chinese leader Deng Xiaoping instituted over three decades ago, Eberstadt said that while lots of people were talking about the liberalization of China and the economic reforms under Deng Xiaoping, “the heart of the society—the basic unit of society is the family—and the claim that the government has the right to decide how many babies parents have is much more totalitarian than anything that Lenin even planned.”

“So the idea that Deng Xiaoping was going to transform the Chinese family and calibrate the Chinese family to perfect this future economic paradise of course has ended in a disaster,” he said. “What else could it end in?”

China ended its one-child policy in favor of a two-child policy last year because it feared the country’s aging population could lead to a massive economic slowdown.

Eberstadt said that there will be “a lot of downward pressure on economic growth rates in China,” which may still be “very fast compared to a lot of the rest of the world.”

But the problem, according to Eberstadt, is “our financial system and our businesses have banked on an unrealistically high permanent growth rate in China.”

As for why America’s financial industry and intelligence agencies have overestimated China’s growth potential, Eberstadt said that “it’s the easy temptation to think that tomorrow is going to be just like today plus two percent. Growing in a straight line.” But “straight lines don’t happen in history when you actually look at it,” he said.

Eberstadt added that people in politics usually do not pay attention to demographics and are obsessed with what happens in the next 24 hours. But “demographic change creeps up on you on little cat feet” and “it doesn’t become clear that things have changed for half a generation… but at that point the door’s closed.”

Listen to the full interview below:


Please let us know if you're having issues with commenting.