A Study On The Impact Of China 's Population Change On Economic Development And Social Insurance

Since the family planning policy implemented, China has completed huge and profound demographic transition with the declining of fertility rate and gradually extending of life expectancy. According to the fifth census data in 2000, China had entered the aging society. The sixth census data of National Bureau of Statistics of China shows that the share of aged 0-14 in total population had fallen to 16.6%, the share of aged 60 and above in total population had risen to 13.26% in 2010. Aging has become China’s long-term trend, and it will further accelerate. According to population forecast of the United Nations, in 2050, the proportion of aged 0-14 in total population will decline to 14.8%, while the proportion of aged 60 and above in total population will increase to 32.8%, when China will become the country with higher level of aging in the world. Population change of China in the future will greatly affect China’s economic and social development, the "old before getting rich" situation in China will greatly constitutes a huge challenge for China’s development.This paper attempts to carry out the detailed research that population changes of China impact on economic development and social insurance from the following several aspects. First of all, based on the age different and features of residents’ consumption structure, this paper divides total population into different age groups according to age, and analyzes the impact of different age groups on the total consumption and consumption structure by constructing a econometric model, which lay a certain empirical foundation for comprehensive analysis using CGE model later. The study finds that infants and college students in urban households have a relatively larger effect on the residents’total household consumption; while college students in rural households have a relatively larger effect on the residents’ total household consumption. But specific to the influence of consumption of various commodities, the situation is different:a higher expenditure share on education for the youth, a higher expenditure share on clothing, residence, household facilities, transportation, communication and miscellaneous for the middle aged, and a higher expenditure share on food and medical services for the elderly.Secondly, based on the emphasis of the study, this study analyzes that 2010-2050 population change of China under baseline scenario (fertility eventually steady at 1.8) impacts on economic growth, industrial structure, employment structure, consumption structure, pension and medical insurance using a dynamic CGE model which includes pension insurance account and medical insurance account as well as variables of different population age structure. The results show that:(l)With the aging deepening further, GDP growth rate gradually declines from 7.9%in 2010 to 2.93% in 2050. (2)The aging has a certain impact on industrial structure and employment structure. With the aging deepening further, tertiary industry’s added value in GDP gradually increases from 40.76% in 2010 to 70.67% in 2050, similarly, share of the tertiary industry’s employment also increases from 35% in 2010 to 69% in 2050; correspondingly, the secondary industry’s and primary industry’s added value in GDP and the proportion of employment will reduce. Then food, resident services, health, social security and welfare commodity’s spending demand will increase dramatically. (3)With the aging deepening further, household demand for resident services consumption accounted for total household consumption presents a gradually increasing trend, so does household demand for health, social security and welfare consumption accounted for total household consumption. While household demand for education consumption accounted for total household consumption increases first, after falling. (4)The aging will greatly improve old-age pension fund and medical insurance fund expenditure, so enlarge the deficit of endowment insurance fund and medical insurance fund. It increases public financial burden and seriously threat to China’s fiscal stability.This study compares and analyzes influence of population change on China’s economic development and social insurance under three population change scenarios, including high scenario(fertility eventually steady at 1.94),baseline scenario and low scenario(fertility eventually steady at 1.6). The results show that:(1) High scenario that effectively raises the fertility rate near to the replacement level, not only make GDP and GDP growth rate larger, but also make the level of per capita GDP relatively higher. In 2050, GDP is 6.6% and 13.2% higher than baseline scenario and low scenario, respectively; GDP growth rate is 0.34 percentage points more than that of baseline scenario,0.72 percentage points more than that of low scenario; the level of per capita GDP is 700 yuan more than baseline scenario,1000 yean more than low scenario. (2) Under the low scenario, the proportion of tertiary industry’s added value in GDP is higher, while the proportion of secondary industry’s added value in GDP is lower, so does proportion of primary industry’s added value in GDP. At the same time, food’s, resident services’s, health, social security and welfare’s added value in GDP are higher. (3)Under the low scenario, household demand for resident services consumption accounted for total household consumption is higher, so does household demand for health, social security and welfare consumption accounted for total household consumption. But household demand for education and food consumption accounted for total household consumption are lower. (4)Compared to other two scenarios, low scenario greatly increases to endowment insurance and medical insurance debts. Therefore, under high scenario of two-child population policy that effectively raises the fertility rate to close to replacement level, population changes has the least negative impact on China’s economic development. It will also significantly reduce the deficit of pension fund and medical insurance fund debts.Lastly, no matter what kind of these scenarios, the depth aging trend will be an inevitable trend for China’s population development. In this context, this paper sets up two alternative policy scenarios which gradually extending the retirement age and improving the contribution rate. Compared with baseline scenario, they analyze the implementation effect of these alternative policies. The results show that gradual extension of retirement age and improving the contribution rate can significantly reduce the country’s pension fund deficit and health insurance fund deficit. These policies not only can reduce the financial burden, but also will be conducive to China’s economic growth. The both difference shows that, gradual extension of retirement age can improve the level of household per capita income, improving the contribution rate is opposite.