【正确答案】 The Potential Impact of China's Aging Population on Its Economic Growth
Theoretical studies suggest that aging population will reduce labor supply, reduce the social saving rate, result in reduced output and capital formation, and ultimately affect economic growth. In the meantime, the experiences of developed countries show that with aging population, expenditure for the elder and per capital health care will rise sharply, adding to the fiscal burden.
Compared with "synchronization of getting rich and becoming an aged society" or "becoming a rich society before getting older" , China's per capita income is still relatively low, and China's situation belongs to "becoming an aged society before getting rich" , and its impact on economic growth is increasingly evident. First, in the future, declining labor supply and rising labor cost will have a negative impact on the corporate sector, especially on labor-intensive enterprises. Second, the rising elder dependency ratio will affect households' saving amount and the propensity to save, and indirectly affect corporate saving behaviors by depressing corporate profits. The decline in savings will reduce the source of investment funds, and in turn affect the price of funds. Third, aging population will add to fiscal burden. Compared with developed countries, China's social security level is relatively low; both the pension funds and medical insurance system face the problems of insufficient funding and inadequate coverage, and there are shortfalls in many localities. As China's social security system gradually improves, the level of pensions continues to rise, and the health insurance coverage expands, in the future fiscal expenditures resulting from aging population will grow rapidly , adding to the increasing fiscal pressures.
Since population aging is a long-term issue in China, measures should be taken continuously to promote urbanization and balanced regional economic development, and to facilitate the transfer and reemployment of surplus labor in the rural area. Furthermore the following measures should be taken: increase human capital input, and improve labor quality; vigorously promote technological innovation and upgrade industrial structure to offset the gradual loss of labor advantage via technological progress; accelerate the building of the social security system, and continue to expand the coverage of pension funds and medical insurances to gradually upgrade the social security level.