The U.S. and China: A "special relationship" in the making?

1. Jobs for the middle class. Both China and the U.S. have bifurcated economies. Jobs at the very low end are plentiful – eight out of the 10 fastest growing job categories in the U.S. are in low-wage areas like tourism and leisure. Even as coastal wages rise in China, factories are moving inland to take advantage of another 20 years worth of low paid workers; there are still hundreds of millions of people in China living on less than two dollars a day. While both countries have a talent shortage at the very top end, workers in the middle are out in the cold. Chinese college graduates have a 40% unemployment rate; meanwhile, American graduates are facing the toughest job market in decades…

3. Rising healthcare costs. As countries get wealthier, and older, there is a growing demand for healthcare – and rising associated costs. The U.S. has already seen this play out, of course; we have less a deficit problem than a longer-term healthcare spending problem. Now China is beginning to see it, too. Nine percent of the population is currently over 65, but that number will rise to 25% within the next 30 to 40 years according to statistics shared by Johnson & Johnson Chairman and CEO Alex Gorsky at the Fortune panel. Despite our wealth gap with China — average American living standards are about six times higher — neither country has a particularly efficient health care system or a broad social safety net. And in both countries, economic security could well be increased by further healthcare reform – in the U.S., about one-third of those who cycle in and out of poverty do so because of a healthcare emergency. In China, the lack of adequate state healthcare is one reason that the savings rate is so high, and consumption (which is desperately needed to rebalance the economy) remains lower than it might otherwise be.

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