The Impact of Aging on the Economy and Countermeasures in China and Japan

Abstract

China is facing significant economic impacts as its population continues to age. Japan, a country with a similar aging pattern and cultural background, has developed a mature coping system that can serve as a guide for China's aging direction. This paper aims to explore the impact of aging on the economy and potential policy actions for China. Specifically, the paper analyzes the impact of aging on labor, consumption, and investment. It could be founded that, in terms of the labor force, aging will reduce labor supply, while the proportion of the workforce in middle and old age will increase, slowing down economic growth. In terms of consumption, aging will promote consumption through pension expenditure in the short term, but will slow down consumption expenditure in the long term. From an investment perspective, ageing will reduce investment by society as a whole, except for some pension-related industries. This paper responds to this phenomenon by comparing relevant policies between China and Japan, and advances three countermeasures to mitigate the negative impact of aging: policy improvement, learning of advanced models, and intelligent provision for the elderly.