You cannot work out what’s next for China by extrapolation

History does not advance in a straight line.

Investment means dealing with an uncertain future, but forecasting is a tricky undertaking.

Two articles from Fiduciary Matters Blog, Russell Investment

 

You cannot work out what’s next for China by extrapolation

http://fiduciary-matters.russell.com/forecasting-china-extrapolation/

Since 1990, official real GDP growth in China has been roughly 10% a year. That means the economy is more than 30 times as large today as it was 25 years ago.

However,
“China’s emergence as the world’s second largest economy is taken for granted today, but would be astonishing to an observer in 1980.”

It’s difficult to imagine changes that are not yet underway, so it can also be difficult to imagine the slowing or reversal of trends that are currently in full throttle.

The smart thing to do may be to temper our desire to forecast.
The key to dealing with uncertainty might not be forecasting at all, but adaptability.

 

Things change

http://fiduciary-matters.russell.com/demographic-change-market-disruption/

In the U.S. context:

Immigration: The U.S. is more open than most developed economies, and has been more successful, too, in assimilation. Medium-term global migration patterns, however, are unpredictable.

Changing role of women in the economy: 60% of those graduating college in 2015 were female and 25% of registered voters in the 2012 election were single women.

Demographic change

Some big leaps forward have been in places you might not have expected: massive progress in school enrollment in Bangladesh and toward nationwide public broadband WiFi coverage in Rwanda are just two of the notable developments.

While income inequality within countries has grown in recent years, it has become smaller between countries, as the poorest nations have seen faster growth.

Aging in China

China’s massive demographic change is far from over: by 2050, it is likely that 35% of the Chinese population will be over 60 years old, a huge shift.

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