Dynamic Analysis of the Effects of Aging on China’s Sustainable Economic Growth

Abstract

China’s aging population has deeply affected the sustainable development of the Chinese economy. Based on the provincial panel data of China’s population and economic indicators from 2000 to 2020, this paper develops a panel vector autoregressive model to analyze the effect of China’s aging population on economic growth under the paths of household consumption and national savings, respectively. The results show that an aging population inhibits household consumption and promotes national saving, which has both direct and indirect effects on economic growth. In particular, an aging population is not conducive to sustainable economic development in the context of China’s slow population growth over the past three years and the contraction of the global economy due to the COVID-19 pandemic. In accordance with the empirical results, this paper puts forward corresponding policy recommendations, as follows: improve the pension security system; develop the silver-hair industry; expand domestic demand in China; encourage fertility; and increase human capital investment to provide an impetus for sustainable economic development.