Contractions in Chinese fertility and savings: long run domestic and global implications

Jane Golley (), Rodney Tyers and Yixiao Zhou

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: Following three decades of rapid but unbalanced economic growth, China's reform and policy agenda are set to rebalance the economy toward consumption while maintaining a rate of GDP growth near seven per cent. Among the headwinds it faces is a demographic contraction that brings slower, and possibly negative, labour force growth and relatively rapid ageing. While the lower saving rates that result from consumption-oriented policies and rising aged dependency may contribute to a rebalancing of the economy, in the long run they will reduce both GDP growth and per capita income. Moreover, while an effective transition from the one-child policy to a two-child policy would help sustain growth and eventually mitigate the aged dependency problem, it would set real per capita income on a still lower path. These conundrums are examined using a global economic and demographic model, which embodies the main channels through which fertility and saving rates impact on economic performance. The results quantify the associated trade-offs and show that continuing demographic and saving contractions in China would alter the trajectory of the global economy as well.

Keywords: China; demography; imbalances; spill-overs; global effects (search for similar items in EconPapers)
JEL-codes: F42 F43 F47 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2016-03
New Economics Papers: this item is included in nep-cna, nep-gro and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Chapter: Contractions in Chinese Fertility and Savings: Long-run Domestic and Global Implications (2016)
Working Paper: Contractions in Chinese Fertility and Savings: Long run domestic and global implications (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2016-12

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