Contractions in Chinese Fertility and Savings: Long-run Domestic and Global Implications

Jane Golley, Rod Tyers, Yixiao Zhou

    Research output: Chapter in Book/Report/Conference proceedingChapter

    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.
    Original languageEnglish
    Title of host publicationStructural Change in China: Implications for Australia and the World
    Editors Iris Day and John Simon
    Place of PublicationSydney
    PublisherReserve Bank of Australia
    Pages243-280
    ISBN (Print)9780994209368
    DOIs
    Publication statusPublished - 2016

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