The Chinese Communist Party has been in power for 75 years. How much longer can it retain its grip?

The Soviet Communist revolution resulted in 70 years of power before collapse. Right up until the end, few outsiders would have thought collapse was near at hand. No country has survived communist rule for more than 75 years. China is now the leader. All the other attempts failed sooner. The reasons are plentiful.

What is going on in China right now? There are two obvious and insurmountable problems that China has. They are, by nature, insoluble. The first is the central control of the economy by the ruling political class, the communists. The second is demography.

To the first, centralised control of an economy by its nature cannot encourage human self interest to maximise innovation and productivity. The reason is simple: no authority has the knowledge of the preferences and wants of the millions of individuals that make up the population. Only when individuals are allowed to express their preferences by their economic actions can the entrepreneurs and innovators figure out how best to use scare resources and add value so that everyone is better off. In a free market economy, power comes from the ballot box. Mao said power comes from the barrel of a gun.

To demographics. China’s fertility rate is below its mortality rate. The population is shrinking and ageing. There is no migration to China to speak of. In fact, the wealthier Chinese leave if they can. The female population is fewer in number than the male. The demographics are such that the productive capacity of the economy, such as it is under communism, and therefore the ability to improve living standards, is weakening. Peak living standards may already have passed. The opportunity for individual Chinese people to become wealthy may be waning rapidly.

I have a number of charts to show that demonstrate the problems.

Investment is necessary to improve productivity. If foreign investment is falling away, it must be replaced by domestic investment otherwise the economic output will stagnate and decline.

What foreign investor would want to invest in China today? The opportunities that arose from the relaxation of some communist controls have all been exploited. What is left is tougher pickings and the institutional, business and legal culture is not in the least familiar to a foreigner.

What does this point to? A country with substantial issues that are already inhibiting the ability of ordinary people to work, improve their lives and improve the lives of their children. There is no other future.