Ageing and Economic Growth in China

China's ageing population is expected to slow the country's economic growth in coming years. Population ageing can have a negative effect on a country's growth due to the decline in the working-age population relative to the dependent population, and could cause decreased labour productivity growth, as has been the case in other countries which have experienced similar demographic shifts. This paper seeks to estimate the causal effect of ageing on GDP per capita growth in China using data among China's provinces. I find that over 10 years a 10 per cent increase in the proportion of the population aged over 60 decreases nominal GDP per capita by around 7 per cent, all other things equal. These estimates imply that an ageing population has placed downward pressure on China's economic growth in the 2010s and 2020s so far, with this pressure likely to continue in the coming years. Authorities have so far responded to this challenge by increasing retirement ages and introducing policies such as a nationwide childcare subsidy. Different sectors in the economy are not likely to be affected uniformly by population ageing. I find that an increase in the old-age ratio increases the contribution of services (excluding real estate) to output, and decreases the contribution of construction.