Trade Wars Just Beginning…The War Is a Fight Over an Indefinitely Shrinking Pie
From a growth perspective, it doesn’t matter if the world is 7.5 million or 7.5 billion persons…it only matters how many more there are from one year to the next. Economic growth (or the ability to consume more…not produce more) is about the annual growth of the population among those with the income, savings, and access to credit (or governmental social pass-through programs). That’s what this trade war is all about and why it’s just beginning. First it was a fight for decelerating growth…but now it’s about a shrinking pool of consumers.
Nowhere is this decline in potential consumers more acute than East Asia (China, Japan, N/S Korea, Taiwan, plus some minor others). I have previously detailed China’s situation HERE but the chart below shows the broader East Asia total under 60 year old population (blue line) and annual change in red columns. Peak growth in the under 60yr/old population (consumer base) took place way back in 1969, annually adding 22 million potential consumers. As recently as 1988, an echo peak added 19 million annually but the deceleration of growth since ’88 has been inexorable. Then in 2009, decelerating growth turned to decline and the decline will continue indefinitely. What began as a gentle decline is about to turn into progressively larger tumult. By 2030, the under 60yr/old population will be 9% smaller than present. East Asia’s domestic consumer driven market is collapsing in real time and it’s reliance on exports greater than ever.
The chart below shows the total 0-65 year old global population (minus Africa and India…blue line) and the annual change in that population in the red columns. Why excluding Africa/India? Because they represent nearly all global population growth, consume less than 10% of the global exports, and haven’t the income, savings, or access to credit to consume relative to the rest of the world. Growth (x-Africa/India) peaked in 1988, annually adding 52 million prime consumers.
The chart below shows the total 0-65 year old global population (minus Africa and India…blue line) and the annual change in that population in the red columns. Why excluding Africa/India? Because they represent nearly all global population growth, consume less than 10% of the global exports, and haven’t the income, savings, or access to credit to consume relative to the rest of the world. Growth (x-Africa/India) peaked in 1988, annually adding 52 million prime consumers.
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