The Study Of Chinese Demographic Transition And Economic Growth

In the long run, economic stagnation and take off cannot be seen as the result of exogenous shocks, rather it has its own intrinsic endogenous driving mechanism. Over the past two thousand years, China had experienced prosperity, stagnation and revival, its development process had a profound impact on the progress of human. Why Chinese economic had such huge fluctuation in the long run, how to maintain sustained growth and to prevent stagnation and recession are research focus for the development economists.In order to find out a unified framework to explain the reason of China's prosperity, stagnation and revival, this paper started from reviewing existing literature on economic growth theory. After that, this paper found out the research on economic growth were mainly based on the western economic development process in the past 200 years which were found of multi-national culture and without continuity and unity. After twenty-first Century, Galor with his fellows established the unified growth theories, which capture the micro-economic basis that has characterized the evolution of economies from a Malthusian epoch to the sustained economic growth regime. Difference to the Malthus theory, neo classical growth theory and endogenous growth theory which only focused on one of the development process, the unified growth theory give a better explanation of the endogenous economic growth mechanism from the stagnation to take-off and provides a relatively coherent explanation of the economic development of human society.But the unified growth theory model was established in the context of western economic development process, which is not confirm with the Chinese economic growth history, and the unified growth theory ignores the contribution of institution. This paper shew the contribution of institution to the economic growth, and modelled it into the Galor (2005) model. Based on the change in the quantity and quality of the population, this paper divide thousands of years of China economic growth into three stages. Through comparative analysis and the application of the theoretical model, this paper explains thousands of Chinese economy growth process.In the Malthus period (before 1949), the size of the Chinese population is basically two times as large as Europe's, so Chinese technological progress and institutional progress are faster than the west. Emergence of imperial examination education system had changed the Chinese political system and economic system gradually. Chinese economic system gradually transited into peasant economy and political gradually transited into centralized, high efficiency, low cost bureaucratic system which push China into leader of world in the song dynasty. But after 1500, due to the limitation of natural science education caused by the imperial examination system, the Chinese technology progress had slow down. The progress of the Chinese per capita income began to decline due to the offset effect of population growth. At the same time, the exogenous shock produced high demand for labor substitution technology in Western European, it increased investment of natural science education and lead to the change of the way of technology progress, then caused the industrial revolution. Continuous technological progress improve the per capita income of western European countries and turn them into the leader of the word. In this paper, we use the new theoretical model of the unified growth theory explained the two processes.In the post Malthus period (1949-1978), the increase of natural science education, leaded to the formation of continuous technological progress mechanism in China, so that the Chinese economic began to break the Malthus boundary. The population and per capita income of China growth simultaneously, and transited China into an industrial country. China started its demographic transition in 1965, but at this time, two political movement destroyed the Chinese education system, hindered the realization of demographic dividend, resulting in 10 years of stagnation. In this paper, we use the new theoretical model explained how the negative impact of education influence the growth mechanism transformation of Chinese economic in the post Malthus period.In the sustained growth period (After 1978), the One-Child policy had accelerated the transformation of endogenous economic growth mechanism in China. The One-Child policy had accelerated the decline of Chinese dependency ratio, which reducing the population's offset effect to per capita income, increased the physical capital and human capital accumulation. And it induced the Chinese parents to improve their children's education investment, which had promoted the transformation of the Chinese endogenous economic growth mechanism transition. After that, this paper compared the differences of the endogenous growth mechanism transformation between Chinese and western European countries and their demographic transition processes. The western economies' endogenous growth mechanism transformation droved the demographic transition, where in China the demographic transition promote the transformation of endogenous growth mechanism. In this paper, we used the new unified growth model to explain how One-Child policy accelerated the process of the endogenous growth mechanism transformation in China.After World War II, Asian began wide range of demographic transition, but the degree of realization of demographic dividend had great divergence. The economic growth rate of Japan, Hong Kong, Singapore, Taiwan, South Korea and China (after the reform and opening up), was significantly higher than that of other Asian economies. Why these economies do successfully absorbed the demographic dividend through effective system arrangement, and other Asian economies could not? Japan and the "Four Asian Tigers" has a common feature that their social system are evolved from China. This paper claimed that the long term human capital accumulation in the history has great impact on the institutional innovation during their growth. Then, this paper explained how China realized the demographic dividend in the context of accelerated demographic transition, and used the new unified growth theory model to explain the contribution of historical human capital accumulation to economic growth.In the recently years, Chinese demographic dividend began to decline, and China is starting to face the population aging. Chinese population aging is not unique in the world, the problem of Chinese population aging is the accelerated demographic transition had caused the Chinese population getting old before rich. And the policies Chinese government used to protect the realization of demographic dividend had caused the income distribution becoming more unequal. Old-before-rich and unequal income distribution will reduce the investment of education of Chinese parents, which leading China into the Middle income trap. This paper use the new unified growth model explained the difference between the auto population aging and population aging through controlled demographic transition.Then, this paper verified the assumptions of the model through empirical analysis and proved out that the distribution of education resources between natural science and social science will have a significant impact on the economic growth. The distribution of education resources must be arranged according to scarcity of labor market.In the end, this paper did a summary and provided three policies advices to maintain the sustained economic growth policy. To relax family planning, to increase investment in education and to improve the allocation of education resources between natural science and social science according to the scarcity of labor market.