James Liang — co-founder of Trip.com (a $50B online travel company), former Stanford PhD student in demography, and professor at Peking University — argues that demography is the most overlooked factor driving innovation, and that the coming fertility collapse in China, Japan, and other East Asian nations will determine the outcome of the US-China technology race. He has implemented pro-natalist policies at Trip.com (paying employees $50,000 per child) and is launching a $1 billion fund to pay PhD students to have babies, because he believes low fertility is not just a financial or pension problem but a civilizational one that leads to cultural and technological stagnation.
The Demographic Case Against Aging Societies
Aging populations create structural conservatism that suffocates innovation:
In companies, older cohorts control decision-making, leading to slower promotion for younger workers, less risk-taking, and reluctance to adopt new technologies.
In politics, older voters turn out at higher rates, pushing societies toward conservative economic policies and away from the dynamism that favors new ventures.
James contrasts Japan’s hierarchical, seniority-based corporate culture today with its innovative heyday in the 1970s–80s, when the population was younger and cohorts were large and fast-advancing.
Japan’s three-decade economic decline cannot be explained by the 1990s financial bubble alone — financial crises typically last a few years at most (the Great Depression lasted ~10), but Japan’s stagnation has persisted for nearly 30 years, pointing to demographics as the deeper cause.
The US-Japan divergence is essentially Silicon Valley — the US produced a continuous stream of high-tech startups while Japan produced very few, and James argues this gap is rooted in age structure, not financial policy.
An older society is not without benefits — Japan is clean, safe, stable, and comfortable for retirees (some pensions exceed entry-level salaries), but it is a poor place for young people seeking career advancement, and James would not recommend it as a model for ambitious youth.
Why Small Populations Are Disadvantaged in the Digital Age
In the pre-digital era, small countries could thrive by specializing in manufacturing and exporting globally (Germany, Japan, smaller European nations), achieving scale through trade.
In the digital age, large countries have an even greater scale advantage because:
Users participate directly in innovation — more users means more data for AI training, better service improvement (e.g., Trip.com’s platform gets better with more users), and more content contribution (e.g., social networks).
Marginal cost of scaling digital products is nearly zero, so reaching critical mass requires a smaller percentage of a large population (e.g., 30 million users is 10% of the US but 30% of Japan and only 3% of China).
Successful companies in large home markets can then dominate smaller foreign markets — as Google did after dominating the US.
Cross-border digital business is harder than it appears — beyond language, differences in local supply chains, regulations, business development channels, and customs create real national boundaries for commerce, especially for transaction-based businesses (e-commerce, travel, finance) as opposed to pure content/social media.
James acknowledges that small states can still succeed as gateway nations (e.g., Singapore as a hub for Southeast Asia) without being major innovators, but for mid-to-large countries, population size is a critical factor in whether they can create innovation hubs.
Why Fertility Declines as Countries Get Richer
Global factors driving lower fertility as countries develop:
Lower infant mortality means fewer children are needed to ensure survival.
Welfare systems reduce the need for children as old-age support.
Rising opportunity cost, especially for women, as careers and education compete with child-rearing time.
Children require more education, making them increasingly costly to raise.
Alternative entertainment and lifestyle options compete with the time and energy that having children demands.
East Asia faces additional, region-specific pressures:
Extremely high-pressure exam-based education systems (e.g., China’s gaokao) impose enormous financial and time burdens on parents and children.
Parents invest heavily in fewer children’s education, making large families economically and psychologically daunting.
This education-fertility link is, in James’s view, the primary channel through which China’s education system damages innovation — not by reducing the creativity of those already born, but by suppressing the number of children born (potentially cutting the future talent pool by ~50%, far more than the ~5% productivity loss from rote memorization).
The Marriage Question and Fertility
James treats marriage and fertility as two separate problems:
Japan still has relatively high marriage rates but very low children-per-family.
Some European countries (France, Scandinavia) have declining marriage rates but maintain near-replacement fertility through government support and acceptance of non-traditional family structures.
He does not argue that marriage must be solved before fertility, but rather that both need targeted policy attention.
The Case Against Longevity — and the Novel After Immortality
James wrote a science fiction novel, After Immortality, as a thought experiment about a society where a pill grants extreme longevity:
In such a society, people would be extremely conservative (unwilling to risk their near-infinite lives), promotion would take centuries, young people would be blocked from advancement, and innovation would slow to a halt.
The novel explores the conflict between an “immortal” nation and a “normal” nation where life and death still exist, including a love story between the two societies.
James’s critique of the longevity movement adds a dimension beyond the usual concern about overpopulation:
Even if people could live 200 years, the society would be de facto dominated by old people, reproducing all the stagnation problems seen in Japan.
The brain’s declining capacity to absorb new things with age means longevity without cognitive “refreshing” could worsen the innovation problem.
He is not calling for a ban but is deeply skeptical that longevity is compatible with a dynamic, innovative society.
James Liang’s Life: Between Entrepreneurship and Academia
James’s unusual path straddles elite circles in both the US and China:
Started college at 15 in China after winning a programming contest, studied at Fudan University and Georgia Tech, worked at Oracle in Silicon Valley and then Oracle China.
Co-founded Trip.com in 1999; it went public on NASDAQ in 2003 and became dominant and profitable within a few years.
Left the CEO role in 2006–2007 to pursue a PhD at Stanford in economics/demography, driven by boredom and a desire for intellectual challenge.
Became a professor at Peking University but was called back by the board around 2010–2011 to rescue Trip.com during the mobile revolution, when the company was losing market share to faster-moving startups and engaged in a price war.
He describes the return as a sense of duty rather than desire — as founder, he had unique authority to make hard decisions that no one else could, and he felt responsible for the company’s survival.
For the past 15 years, he has maintained a dual role as chairman of Trip.com and an active demography researcher, finding that the two roles reinforce each other: his economics training helps him run the company with evidence-based, scientific rigor, while his business experience gives him real-world insight into innovation and policy.
He uses Trip.com as a laboratory for social experiments, such as a randomized A/B test on working from home (published in a top academic journal), giving him an advantage over pure academics who cannot test policies at scale.
His initial motivation for starting Trip.com was financial, but after achieving independence, his purpose shifted to pursuing novelty and intellectual challenge — he chose the travel industry not out of personal passion for travel but because it was the easiest e-commerce model to be profitable (no physical delivery or complex payment infrastructure needed in early-2000s China).
Innovationism: A Philosophy for the Age of Abundance
James’s book Innovationism proposes that the purpose of human civilization is “innovation and heritage” (which he calls “genovation”):
Innovation is the creation of new knowledge, technology, art, and experiences — the activity that defines humanity and distinguishes humans from animals and machines.
Heritage is the application, preservation, and transmission of accumulated knowledge, ensuring sustainability and providing the foundation for future innovations.
Genovation (a term he coined) combines innovation with “generation” — having children is itself a form of innovation, because people are the “hardware” that carries and creates the “software” of civilization. Just as genes accumulate through biological evolution, human capital accumulates through reproduction and education.
Innovation and heritage are not cleanly separable but exist on a continuum — even radical innovations (SpaceX’s reusable rockets) are 99% built on prior knowledge, while even conservative acts of cultural preservation (Confucius compiling ancient texts) can be innovative in their framing and selection.
The test of a successful innovation is whether it becomes heritage — that is, whether subsequent innovations build on it, cite it, or apply it. An innovation that is completely bypassed by future developments likely “innovated too much.” Failed innovations still contribute to overall knowledge.
James’s exchange with a Buddhist master at a meditation retreat crystallized his philosophy: while Buddhism teaches contentment in the present moment, James found himself bored and drawn to thinking about the future’s possibilities. He argues that in an age of scarcity, desire for novelty causes suffering, but in an age of abundance, the pursuit of novelty through innovation gives life purpose and meaning.
He acknowledges Plato’s critique of novelty — that it shifts attention from the essence of things to their superficial newness (as in much modern art) — and agrees that classical art is often superior. But he argues that the innovations that become lasting heritage (Renaissance art, Athenian philosophy) are the ones worth pursuing, and that even classical techniques may be preserved and extended with AI’s help.
Can AI Innovate?
James argues that AI should not and cannot be the primary driver of innovation, on both descriptive and normative grounds:
Descriptively: AI lacks the values, emotions, and ethics that humans have evolved over millions of generations. Humans share genes, the experience of mortality, and the drive to reproduce — AI does not fear death, does not share human purpose, and cannot be trained to do so. This makes AI a worse innovator, especially for artistic and cultural innovations that require human validation and experience.
Two unpredictable systems (AI + innovation) together are too risky — AI already has hallucination problems, and innovation is inherently unpredictable. Entrusting one to the other compounds risk.
Normatively: Innovation is the most rewarding and lasting source of human joy. It is what makes us human. We should not cede this pursuit to machines.
AI can generate many possible paintings or music, but humans must validate and experience the output — James would not ask an AI to test his travel products by taking a vacation on his behalf.
The US-China Innovation Race
China is rapidly catching up to the US and will likely overtake it in overall technological advancement within 5–10 years:
China has already matched or surpassed the US in the number of R&D personnel (due to lower labor costs, even though total R&D spending in dollars is still slightly lower).
China dominates in manufacturing and heavy-asset technologies; the US retains leads in software and cultural/artistic innovation, though China is closing those gaps too.
The common view that China is good at “1 to 100” innovation but weak at “0 to 1” breakthroughs is, in James’s view, merely a reflection of stage — China is still catching up, so learning from leaders is natural. As China reaches the frontier in more industries, it will be forced to produce original breakthroughs.
China’s advantage will last 10–15 more years, then hit a cliff due to the fertility collapse that has already occurred. The US, as long as it continues to attract immigrants, will likely regain the lead as China’s young population shrinks.
James’s ideal demographic shape is a pyramid (many young people creating a meritocratic, energetic society), but he acknowledges that resource limits make indefinite population growth impractical. A stable column-shaped demographic is the best realistic goal, since no major country is near replacement-level fertility.
How to Raise Fertility
James identifies three categories of policy levers:
Direct financial and material support for young families — cash payments, tax rebates, free-interest loans, childcare support. Based on cross-country statistical analysis, 1% of GDP spent on family support raises the fertility rate by about 10%. To raise China’s fertility from ~1 to the replacement level of ~2 would require approximately 10% of GDP.
Encouraging men’s participation in child-rearing — expanding paternity leave beyond maternity leave, fostering a culture where husbands doing housework is normal, especially in East Asian countries where gender roles remain rigid.
Cultural and educational campaigns — publicizing the benefits and joys of large families, which have been forgotten in China and Japan after generations of small families. Using TV dramas, novels, and media to model and envision the positive aspects of having many children.
James implements these principles at Trip.com by paying employees $50,000 per child and is launching a $1 billion fund to pay PhD students to have babies, viewing these as small but meaningful steps toward addressing what he sees as the most serious social and economic problem facing China and many other nations.
