China
Can The Three Child Policy Reverse China’s Population Decline?
To tackle the aging population, steeply falling birth rates, and lack of workforce, the Sino government have passed a new policy earlier this week, the three-child policy. The policy will enable all Chinese couples to have three children, which was restricted until now by the two-child policy of 2016. The Chinese government has promised to financially support the bearing and raising of the third child.
But, will the new policy be able to retrieve the long damage done to China’s population by the four-decade-long one-child policy? Are Chinese couples ready to have three children? And how will the policy affect China’s economy in the long run?
The Three Child Policy
In the second half of the 20th century, industrialization and betterment in living standards led to an explosion in China’s population. The sudden surge in the population increased joblessness, shortage of facilities to accommodate enlarging residents, and numerous other challenges. To control this skyrocketing population, the Chinese government came up with its famous One-Child Policy in 1979, limiting the number of children any couple could have to one.
The policy has been incredibly successful in accomplishing its purpose, it drastically constrained the birth rates in the country, but what followed was unforeseeable. The patriarchal society of China lead many couples to abort girl child making China, a country with one of the most skewed sex ratio in the world today. After hitting the peak population, the country’s workforce, which helped China to become the superpower it is today, started aging. Today, China is amongst the most rapidly aging nations in the world.
The adversities of the one-child policy were undeniable, therefore, in 2016, the Chinese government abolished the policy and replace it with a two-child policy. Under this plan, couples were allowed to have at most two children. But, nothing much changed by the new design, the birth rate kept on falling steadily. According to a census published by the government, the number of births fell by four million from 2016 (16-million) to 2020 (12-million).
While the introduction of the One-Child Policy, there was almost 20 new birth per 1000 person, when the policy was abolished in 2016, the number of birth fell to 12 births per 1000-person. But even after the introduction of the two-child policy, today, the number has fallen to almost 10-births per 1000-person.
China’s young population has also steeply fallen in the subsequent generation, post the one-child policy’s implementation. In the census 2000, 22.9% of the Chinese population was of age 14 or above which fell to 16.6% in census 2010, furthermore, as predicted the aged population surged in the same time period from 10% of the entire population to 13.26%.
The skilled labor workforce which once fuelled huge Foreign Direct Investments in the country is shrinking. This has already started showing its ill effects as some of the major companies are shifting from China to other Asian nations like Vietnam and Bangladesh, in the hunt for cheap skilled laborers.
Why Did The Two-Child Policy Failed?
The two-child policy of 2016 aimed to increase the country’s birth rate, but in just five years, the policy seems to be failing its purpose, as the birth rates continue to fall. When asked to young Chinese couples, the majority don’t want to have two children despite the changes in the laws. Furthermore, working women are putting off having children altogether given the workplace discrimination.
Increased costs of raising a child, hiked real estate prices and deep-rooted social norm of one child are deterring many couples from starting families. What was once introduced as a policy has become a cultural norm in China. Many are critical and ridiculed by the government’s dramatic policy turnaround. From 1980 to 2016 millions of women were subjected to fines are forced abortions and sterilization after having one child. Though these penalties no more apply, the rising cost of living remains a major hurdle.
Will The Three Child Policy Reverse China’s Population Decline?
To cope-up with the increasing finances and numerous other difficulties due to the shrinking workforce, the government is also mulling over delaying the retirement age. The government has also promised to support parents financially for having a third child.
Experts believe that the Chinese government should completely lift any limit to the number of children any couple wants to have. Joshua Rosenzweig, BBC’s China team head says; “Governments have no business regulating how many children people have. Rather than ‘optimizing’ its birth policy, China should instead respect people’s life choices and end any invasive and punitive controls over people’s family planning decisions.”
But, others believe that lifting the restriction on children altogether could have a negative impact considering the huge disparity between rural people and city dwellers. The loss caused due to the shrinking workforce, would not only be incurred by China but the entire world. According to the University of Wisconsin-Madison’s scientist, Dr. Yi Fuxian; “China’s economy has grown very quickly, and many industries in the world rely on China. The scope of the impact of a population decline would be very wide.”
Overcoming the setback of the COVID pandemic, China is well on its way to establishing its foothold as the new superpower. And the most recent of its interest – The Middle East.
After trapping under-developing countries in South Asia and Africa in its debt trap, the dragon is searching for a new ally. An ally with equal resentment with the west and who can support China is becoming the next America, hence Saudi Arabia.
The Glamorous Welcome of President Xi Jinping on the Middle Eastern Soil
Saudi Arabia rolled out the purple carpet when Chinese President Xi Jinping visited Riyadh in December 2022.
Xi Jinping’s journey to Saudi Arabia is his first since 2016, and it is only his third trip abroad since the coronavirus outbreak started. Chinese President Xi Jinping was in Saudi Arabia for a three-day visit that made dozens of agreements for trade, technology, and the economy.
The timing of Xi’s three-day trip to Saudi Arabia is a bit perplexing. The organization of oil-producing countries’ refusal to boost output and the West’s decision to cap the price of Russian oil may indicate that China, Saudi Arabia, and Russia have aligned anti-Western policies.
Considering the warm welcome of Xi Jinping by Saudi Crown Prince Mohammed bin Salman (MBS) and a number of agreements and summits heralded, the White House urged – China’s efforts to sway world events are “not favorable” to the international system.
According to a US spokesperson, the United States is aware of China’s efforts to increase its global influence. Moreover, the USA is well aware that the Middle East is undoubtedly one of those areas where China wishes to expand its influence.
Beijing’s focus on Riyadh may concern the US and its western allies as China is improving its relations with Middle East countries, which are growing further in weapon and oil supply.
Read Next: How China is Engulfing Poor Nations into its Vicious Debt Trap
The $30 million Deal with the New Superpower
The signing of 35 investment agreements worth $30 million between China and Saudi Arabia has dramatically improved the two nations’ commercial ties.
Saudi Crown Prince Mohammed bin Salman and Chinese President Xi presided over the signing of the agreements. The first was an alignment plan between the nations’ Vision 2030 and the Belt and Road Initiative.
Moreover, Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia, and He Lifeng, the head of China’s National Development and Reform Commission, signed a memorandum of understanding on hydrogen energy.
Notably, Chinese cooperation in nuclear energy, security, space, and technology was the highlight of all agreements. China is fostering this relationship with Saudi Arabia, in the region that was formerly under American influence.
During the three-day visit to Saudi Arabia, President Xi addresses a speech in the Saudi capital of Riyadh. The leaders and representatives from the six Gulf Cooperation Council nations – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates were present.
China is one of the biggest oil importers from Saudi Arabia, and the President indicated an unorthodox view during this speech. Mr. Xi specified using the Shanghai Petroleum and Natural Gas Exchange to settle oil and gas contracts in Chinese currency.
Crude oil, typically valued in US dollars, is exported by Saudi Arabia more frequently than any other country. Moves away from the US dollar could weaken the dollar’s position as the world’s reserve currency. However, Saudi Arabia is unlikely to make significant changes because it pegs its currency to the dollar.
China and Saudi Arabia both hailed Mr. Xi’s visit as a historic occasion as the relations that were once limited to oil-based were extended into sales, technology transfers, and infrastructure projects.
The Pressure on the USA in the MiddleEast
Due to deteriorating relations with the US and other Western countries, China seeks to strengthen ties with Middle Eastern nations during Xi’s visit. The links between China and Saudi Arabia are hurting the USA economically and globally.
Saudi Arabia has been a loyal ally of the US for a long time. But recently, its connections with China have significantly created pressure on the USA.
Joe Biden visited Saudi Arabia in the summer to calm skeptical friends and reaffirm American engagement in the Middle East. The President ensures the leaders of Arabs in Riyadh that the United States won’t withdraw and let China, Russia, or Iran fill the void.
But he was unable to persuade the Saudis to increase oil output. Instead, Arab would shortly spearhead a plan to reduce oil production by almost 2 million barrels per day as part of an agreement with Russia.
Along with Saudi Arabia, the US has strained ties with China. Saudi Arabia and China have also adopted stances about the Ukraine War that differ from those of the West.
Both parties have refrained from backing sanctions against Russia. Riyadh has repeatedly maintained that Moscow is a significant energy-producing partner who needs to be engaged on OPEC issues.
UAE: Growing Influence of the New Superpower
In the United Arab Emirates, relatively youthful and forceful leaders are now in charge of the Gulf. Although these nations still significantly rely on the United States for their needs in terms of national security and the sale of weapons.
Although the entry of China into the Middle East has raised concerns and competition among western countries, the United Arab Emirates is taking advantage of the competition.
Moreover, Prince Mohammed wants to reduce Saudi Arabia’s reliance on oil exports by diversifying the country’s economy. He wants to develop a new Saudi military industry as part of a bigger plan to increase the kingdom’s independence and economic might.
Prince is also planning to diversify the country using new technologies and improve internal infrastructure innovatively. China is regarded as a crucial ally in developing the nation’s defenses and infrastructure since it can offer the necessary expertise and technology.
On the other hand, China’s priority is energy, which depends on a steady flow of fossil fuels to function. China has been alert since price fluctuation due to Russia’s invasion of Ukraine this year. As well as a Chinese energy crisis last year resulted in blackouts that shut down companies and towns.
China is therefore acting wisely by trading steady fuel exports for technology, nuclear energy, and space technology with Saudi Arabia.
Nevertheless, Xi’s trip to Saudi Arabia showed that Saudi Arabia and the other Arab nations have options. And they will keep using their growth strategy for international stakeholders to their advantage.
China to Arrest USA Autonomy over Saudi Arabia?
Saudi Arab officials have already said that they have never supported polarization. Saudi Arabia is only striving for the nation’s interest; their interests are in the West and the east too.
However, the young lead of Saudi Arabia is searching for an alternative to enhance the nation’s economy without relying on oil exports. And China has a good chance to arrest US autonomy over Arab countries by providing all required help.
The relationship between Saudi Arabia and the US as it stands right now is fickle. However, China and Saudi Arabia’s strong alliances make it the ideal time for China to seize the chance to replace the United States as Saudi Arabia’s primary trading partner.
The new relationship will not only weaken the USA’s influence in the region, but it will also hurt the US superpower’s global image.
The world is running out of computer chips. And due to the unprecedented shortage of electric chips and semiconductors, a new microchip war is brewing between the two largest manufacturers: India & China.
But, who is winning it? Here’s an explainer:
The Semiconductor Crisis: Explained
Semiconductors are used to make integrated circuits. These microchips are the lifeblood of all electronic appliances, from smartphones, laptops, and gaming consoles to supercomputers and modern weapons.
Powering the technological evolution over the last two decades, the demand for semiconductors has skyrocketed. However, the 2020 pandemic halted the chips’ manufacturing, sparking a global semiconductor crisis.
The crisis was so bad that Apple lost 6 billion dollars in revenue, Maruti had to cut down 40% of its production, and Mahindra had to cut down 20% of its production. Due to chip shortages, the auto industry has already lost 100 billion dollars in revenue.
Even though production has resumed, manufacturers are still unable to fill out the shortage caused by COVID.
So, why is there a sudden shortage of semiconductors and their impact on different industries?
The Rush of people with Electronic Gadgets
The first reason for the shortage is that the industry had already been growing rapidly and was already on the brink of shortage. According to the semiconductor industry association, more than 100 billion integration circuits are used daily worldwide.
The market is so huge that the industry’s biggest players, including Intel, Micron, Nvidia, and Qualcomm, can’t keep up with the demand, given the enormous size of the market.
The Microchip War & Impact of Covid-19
Lockdown-induced online work dramatically increased demand for electronic devices. But with the manufacturing and transportation services primarily halted, demands outstripped supply.
Another the reason why the shortage is so difficult to recover is that manufacturing a microchip typically takes more than four months. Additionally, microchip manufacturers need giant factories with dust-free rooms, multi-million-dollar machines, molten tin, and lasers.
Since manufacturing cannot be increased on such short notice, the wait times for chips increased alarmingly. The situation has worsened so severely that the waiting time spiked from 11.8 weeks in September 2019 to 21 weeks in August 2021.
Consequently, the market value of semiconductors grew over 20% ($600 billion) in 2021.
Hence, the radical difference in supply and demand has turned the table, and this is why companies from various areas across the world from various sectors have started facing production issues.
The four major industries that have furiously faced the heat of crisis are auto, LED lighting, consumer electronics, and the appliance industries.
What is the position of India in the semiconductor market?
Despite homing big heads like Intel, Micron, and Samsung housing and R&D centers in India. India doesn’t have a significant chip manufacturing industry.
When looked at India’s semiconductor trade situation, India became the 13th largest importer of semiconductor devices in the world in 2020, with $2.38 billion in semiconductor device imports.
And now comes the story’s climax behind the semiconductor war between India and China.
The terrifying part is that about 68.1% of India’s semiconductors were imported from China in 2020. Followed by 40% in and 26% from Hongkong in 2022.
So, what is India doing to fix the situation and reduce its dependence on China? And How is India indirectly in the position of war with China in the semiconductor industry?
India Vs. China: The Microchip War
The roots of India & China’s microchip war can be traced back to the Quad Summit.
During the quad summit conference held by US president Joe Biden on the 24th of September 2021 debated on how to tackle several aspects of economic challenges that come through different countries’ economic development. And one such aspect was the semiconductor shortage in the world.
Long story short, chip manufacturing is a complex process requiring multiple steps. So if each country sets up five divisions for five different processes, it is both costly and time-consuming.
Because of this, India, Australia, Japan, and the US have chosen to work together to execute only those processes that best suit their strengths while transferring the remaining ones to other nations.
That means the US will design the semiconductor; Japan will provide resources to make semiconductor that is raw materials and chemicals like silicon wafers and ICs. While Australia will come up with an electronic supply chain as it has access to critical materials and advanced mining.
Meanwhile, India has many skilled engineers and laborers for cheap assembling and manufacturing.
So, in the quad summit US, Japan, Australia, and India joined hands to build a robust semiconductor supply chain based on their strength to eliminate their dependence on China, Hongkong, and Taiwan.
Thus India’s INR 76000 cores production incentives program is indirectly threatening Chinas mega semiconductor chip industry.
Will the Microchip Program Really Benefit India?
The US is very well aware of future weapons and is acting smartly to overcome China in supercomputing and AI tech. That’s why the US wants semiconductor technology to be kept away from the hands of China.
Hence in October 2022 US banned all semiconductor exports to China. Alongside baning all the technologies that China can use against the US.
The US does not want China to develop weapons that may use against the US military. Consequently, fostering India to come up with semiconductor manufacturing to cut the wings of China in the field of making chips.
As discussed above, the US is king in designing the chips, but with sanctions on exporting any such technology from the US, China will face heat.
While the US has joined hands in the quad summit to design semiconductors for India, here comes the answer to that incentive program.
Is India Winning the Microchip Chip War?
Over the next two years, the Indian government plans to establish 20 semiconductor plants. To tackle the shortage of semiconductor Government of India has lined -up with attractive incentive support for companies engaged in silicon conductors, photonics, semiconductor packaging, compound semiconductor manufacturing, sensors fabs, and semiconductor design.
Moreover, India is also tying up with Taiwan and encouraging semiconductor companies to manufacture semiconductors in India by providing land at affordable prices for their setup.
India is in an overstated circumstance where it is a semiconductor-importing nation and is about to switch to a semiconductor-exporting nation. Here is some heat in China. And that sparks an unintentional semiconductor war between China and India.
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