The Impact of Population Aging on China's Macroeconomy

Abstract

China's aging population is a growing concern and the country will become a super-aged society by 2050. Aging has a number of important implications for various macroeconomic indicators in China. From a labor market perspective, aging will have a negative impact on real labor supply and labor productivity in the Chinese market. And the impact on human capital will depend on the relative magnitude of its shrinking effect on educational human capital and its boosting effect on healthy human capital. From an investment demand perspective, an aging population will dampen investment demand in the Chinese market by affecting investment returns and social investment preferences. From a balance of payments perspective, aging may have a negative impact on both China's current account and international capital account, leading to a double deficit in the balance of payments. From a fiscal balance perspective, aging will increase the Chinese government's fiscal burden while decreasing its fiscal revenue, thus increasing the fiscal pressure on the Chinese government.