The Impact Of China’s Population Aging On Fiscal Balance

According to the sixth census data, the population aged65and over accounted for8.87%, up1.91percentage points compared to the2000census. In addition, according to a conservative forecast of the United Nations, China’s population that aged65and over will account14%and even more in2025. The threat of aging will also increase. Aging not only brought about shortage of labor, the decline in output growth, limit economic welfare and employment, but also affect government income and expenditure, thus the fiscal balance will be threatened.This paper mainly discussed the relationship between population aging and government balance. In the first three chapters, this paper first introduced China’s population aging status and research achievements, then described the effect of population aging on different aspects of the economy and on government fiscal balance.In the fourth and fifth chapter, the author used two models (general linear regression model and optimized dynamic model) to analyze the impact of population aging on government fiscal balance. Based on the models and by using the empirical analysis method, this paper respectively studied the short-term and long-term impact of population aging on government fiscal balance. The conclusion is that in short-term, population aging has no significant impact on government fiscal balance, but in the long run, it will greatly affect the fiscal balance. Ten years from now on, population aging will be a key factor that will lead to huge government deficit.The sixth chapter gave a summary of the whole study based on the description and empirical analysis, then gave some advice about how to relieve this impact. The principle of solving population aging problem is to adopt the step by step method.