The Macroeconomic Consequences of Population Ageing and the Population Policy Choice in China: A Computable General Equilibrium Analysis

Xiujian Peng, Monash University

The issue of population ageing is receiving much attention from scholars and policy-makers in China since that country is expected to experience a very rapid rate of population ageing in this century. China's strict family planning policy has resulted in a dramatic fertility decline since the 1970's. This decline has contributed significantly to the rapid ageing of the population with adverse implications for economic growth prospects. An appropriate set of policy responses may help to decelerate the rate of population ageing and mitigate its adverse implications for economic growth. This paper explores three alternative population control policies. Using a dynamic Computable General Equilibrium modelling, the paper analyzes the macroeconomic influences of three population-aging scenarios under the alternative population policy settings in China, covering the period from 2001 to 2100. An implication is that changing the current one-child policy may induce higher GDP growth, while per capita real income may not be higher.