Rise of robots (in China)

Daily Data: China prepares for its demographic winter differently

In today’s dispatch:

• same problem, different solutions

• China goes long robots

• ‘Murica does it differently

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Robots are rising (in China)

Random Walk has written variously in the past that one way of looking at China is that they are taking a different approach to solve similar problems.¹

Without rehashing the whole thing here, China is also an aging country with declining birth rates that has used a substantial amount of debt to “stimulate” (or perhaps simulate?) demand. There’s nothing better than having a young and growing population of talented people, but once that tailwind tapers, you can fill the void in your demographic soul with cheap credit, especially to real estate.

Soon, though, it becomes clear that maxing out the national credit card is fun while it lasts, but it cannot go on indefinitely.²

At a certain point, you might decide to stare reality in the eyes, and just accept the fact of some lean years. The good news is that, in the end, Father Time is undefeated, and eventually the share of older folks will decline, and the young will rise again. Until then, however, you have to grin and bear it.

Fair-warned is fair-armed, of course, so you don’t go into your demographic winter totally unprepared.

How might you prepare for some lean years? Well, you might:

• (a) load up on a lot of real stuff—food, energy, minerals, etc.—since of course you can’t eat debt;

• (b) develop strong(er) relationships with the few parts of the world that are actually growing (i.e. it’s better to be selling EVs to a growing population of Indians and Africans, than selling iphones to a shrinking population of Chinese)—call it Belt n’ Road maybe; and

• (c) invest substantially in robotics and automation to carry the load, since again, a people shortage is why you’re in this mess to begin with.

Anyways, at the risk of over oversimplification (since oversimplification has already been breached), China surely seems to be doing those things.

Indeed, it’s been a common refrain in the Western commentariat that one thing China is not doing, is reengaging the national borrowing machine. That’s, of course, what the US has done—and GDP hasn’t missed a beat—even as the commentariat seems to also understand that endless borrowing is unsustainable. “Haha, China is uninvestable unless they borrow unsustainable amounts of money to stimulate their economy like us. Haha. Stupid China.”³

Anything to Delay the Pain Trade, I suppose.

Do androids dream of electric sheep, even in China?

Further to the point of comparing and contrasting styles, China is apparently taking step (c) “automation and robotics” very seriously.

. . . much more seriously, than perhaps anyone else, except for another aging country relatively close by.

Behold the data!