DEMOGRAPHIC SHIFT, POPULATION AGEING AND ECONOMIC GROWTH IN CHINA: A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS

Xiujian Peng

Pacific Economic Review, 2008, vol. 13, issue 5, 680-697

Abstract: Abstract. Using a computable general equilibrium (CGE) model and a given ageing profile of the population to forecast the growth path of China's economy during the twenty‐first century, this study finds that: population ageing leads to declining economic growth as labour supply shrinks and the rate of physical capital formation declines; households’ material living standards improve, albeit at a declining rate; falling domestic investment partially offsets declining national savings; and the resulting saving‐investment surplus generates a current account surplus and capital outflows. Finally, the main force that can sustain China's economic growth against the backdrop of population ageing is productivity improvement.

Date: 2008
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