| China's population structure has been changing rapidly due to the fertility restrictions imposed by the Chinese government and other socio-economic factors. In my thesis, I first model how fertility rates (the actual rate and counterfactual rates as induced by alternative government policies) will affect future demographic structures (age distribution). Then by means of a numerical general equilibrium simulation study, I assess the impacts of different demographic structures on the Chinese economy in the 21st century.; My emphasis will be on economic variables such as capital flows, the rate of saving, the return to capital, the return to labor, and growth in income. I also examine how China's international capital linkages with the rest of the world affect the results.; My simulation shows that, regardless of international capital mobility, lower fertility rates yield lower savings rates. Since lower fertility rates reduce the supply of future labor, capital will become less productive if the fertility rate is low. Consequently, if international capital mobility is high in China, a low fertility rate will imply future capital outflows. But if capital is less mobile, low fertility levels today will lower the domestic return to capital and raise the domestic return to labor. Impacts on per-capita income are less clear. |
