Demographic shift, population ageing and economic growth in China: A computable general equilibrium analysis

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. © 2008 The Author Journal compilation © 2008 Blackwell Publishing Asia Pty Ltd.