Economic and Social Impact of China’s Aging Population and Public Policy Response

Wang Guangzhou1 and Wang Jun2*

1 Institute of Population and Labor Economics, Chinese Academy of Social Sciences (IPLE/CASS), Beijing, China

2 School of Sociology & Anthropology Sun Yat-sen University, Guangzhou, China

Abstract: In mapping out China’s future development, policymakers must bear in mind the challenges from a falling birthrate and aging society. Based on previous demographic censuses and original data of large sample surveys, this study employed an indirect method for estimating China’s total fertility rate (TFR) and a demographic forecast method based on the parity progression ratio (PPR). Our analysis details the socioeconomic implications behind demographic change, and we have proposed public policy countermeasures. The findings include: (i) China’s ultra-low fertility rate over the past three decades has led to an increasingly aging society, and China’s future fertility rate is likely to continue to decrease. (ii) Around 2024, China’s total population is expected to peak at 1.407 billion, followed by chronic negative population growth at an accelerating pace. By 2050, China’s newborn population will shrink to 8.73 million and the aging population will increase to roughly 30% of the total population resulting in the total dependency ratio above 50%. (iii) With a falling birthrate and aging society, China will face unprecedented challenges with respect to education, employment, and pension. (iv) As a public policy response, China should remove birth control altogether. If the fertility rate continues to stall, policymakers should consider issuing policies to encourage birth and create a birth-friendly society for all birth cycles.

Keywords: falling birthrate, aging society, education, employment, elderly health, removal of birth control

JEL classification code: J11P21

DOI: 10.19602/j.chinaeconomist.2021.01.05