Dynamic Analysis of the Effects of Aging on China's Sustainable Economic Growth

China's aging population has deeply affected the sustainable development of the Chinese economy. Based on the provincial panel data of China's population and economic indicators from 2000 to 2020, this paper develops a panel vector autoregressive model to analyze the effect of China's aging population on economic growth under the paths of household consumption and national savings, respectively. The results show that an aging population inhibits household consumption and promotes national saving, which has both direct and indirect effects on economic growth. In particular, an aging population is not conducive to sustainable economic development in the context of China's slow population growth over the past three years and the contraction of the global economy due to the COVID-19 pandemic. In accordance with the empirical results, this paper puts forward corresponding policy recommendations, as follows: improve the pension security system; develop the silver-hair industry; expand domestic demand in China; encourage fertility; and increase human capital investment to provide an impetus for sustainable economic development.

Automated summary

China's aging population has had a profound impact on the sustainable development of the Chinese economy. This paper analyzes the effects of China's aging population on economic growth through household consumption and national savings using a panel vector autoregressive model based on provincial panel data from 2000 to 2020. The results indicate that an aging population hinders household consumption and encourages national savings, thereby affecting economic growth both directly and indirectly. This is particularly challenging considering China's slow population growth and the contraction of the global economy due to the COVID-19 pandemic. The paper proposes policy recommendations, such as improving pension security, developing the silver-hair industry, expanding domestic demand, encouraging fertility, and increasing human capital investment to stimulate sustainable economic development.