Contractions in Chinese Fertility and Savings: Long run domestic and global implications

Jane Golley (), Rodney Tyers and Yixiao Zhou

No 16-08, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

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.

Pages: 46 pages
Date: 2016
New Economics Papers: this item is included in nep-cna, nep-gro and nep-tra
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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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