The Lunar New Year kicked off with a healthy consumer spending spree by Chinese citizens relieved that they are not facing the unknowns of virus lockdowns in places like Minnesota and Munich. And the Shanghai stock market hit a record high. But the time bomb at the heart of China’s economy — demographics — ticked up a notch as the northeast provinces move towards scrapping even the two-child limit and are considering allowing couples to have as many children as they like. It is not expected to make much of a difference — China’s population is likely to peak as early as 2027, which is just around the corner. Young Chinese people are reluctant to get married, reluctant to have kids and when they do, one is more than enough. The South China Morning post published an interesting article on how “China’s booming GDP masks millennial ‘despair’ over personal prospects”. That could have something to do with it.
Meanwhile, the Biden administration announced that the tariffs on Chinese imports would be kept in place for now. Biden and Xi had a phone conversation, and the China watchers took the view that it was the Chinese who reached out to the Americans to initiate the call. Read into those tea leaves what you will, and have a good weekend.