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Contractions in Chinese Fertility and Savings: Long run domestic and global implications

Author

Listed:
  • Jane Golley

    (Centre for China in the World, Australian National University)

  • Rod Tyers

    (Business School, University of Western Australia, Centre for Applied Macroeconomic Analysis, Australian National University)

  • Yixiao Zhou

    (Department of Economics and Property, School of Economics and Finance, Business School, Curtin University)

Abstract

Following three decades of rapid but unbalanced economic growth, China’s reform and policy agenda are set to rebalance the economy toward consumption while maintaining a rate of GDP growth near seven per cent. Among the headwinds it faces is a demographic contraction that brings slower, and possibly negative, labour force growth and relatively rapid ageing. While the lower saving rates that result from consumption-oriented policies and rising aged dependency may contribute to a rebalancing of the economy, in the long run they will reduce both GDP growth and per capita income. Moreover, while an effective transition from the one-child policy to a two-child policy would help sustain growth and eventually mitigate the aged dependency problem, it would set real per capita income on a still lower path. These conundrums are examined using a global economic and demographic model, which embodies the main channels through which fertility and saving rates impact on economic performance. The results quantify the associated trade-offs and show that continuing demographic and saving contractions in China would alter the trajectory of the global economy as well.

Suggested Citation

  • Jane Golley & Rod Tyers & Yixiao Zhou, 2016. "Contractions in Chinese Fertility and Savings: Long run domestic and global implications," Economics Discussion / Working Papers 16-08, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:16-08
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    References listed on IDEAS

    as
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    Cited by:

    1. repec:bla:ecorec:v:93:y:2017:i:303:p:615-650 is not listed on IDEAS
    2. Jane Golley & Rod Tyers & Yixiao Zhou, 2016. "Fertility And Savings Contractions In China: Long-Run Global Implications," Economics Discussion / Working Papers 16-24, The University of Western Australia, Department of Economics.
    3. Grace Taylor & Rod Tyers, 2016. "Secular Stagnation: Determinants And Consequences For Australia," Economics Discussion / Working Papers 16-25, The University of Western Australia, Department of Economics.
    4. Grace Taylor & Rod Tyers, 2017. "Secular Stagnation: Determinants and Consequences for Australia," The Economic Record, The Economic Society of Australia, vol. 93(303), pages 615-650, December.

    More about this item

    JEL classification:

    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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