The Demographic Features And Chinese Economic Growth:an Empirical Study Based On Recent Data

One of the mechanisms for the improvement of society is economic growth. Generally, economic growth is associated with positive outcomes. Today China’s record growth has garnered the attention of the international community; the economy has had double digit annual growth rate from the early1980s which led to an influx of foreign direct investment and development of non-state enterprises. This growth has fostered socio-economic development especially in health care, wages and salaries, housing, education, transportation and public infrastructure. As a result, the population experience longer lives and higher standards of living.However, coupled with improved standard of living, there have been some negative spills off. The environment has suffered tremendously due to increasing developments, but studies have proven that as an economy grows its environment suffers in the short run, while the long run has the opposite effect. Another two-sided effect is that improvement in the economy result in population longevity. However, longevity leads to a large aging population which is claimed to have severe effect on growth.This research aims to examine the relationship between the economic growth of China and the different measures of demographic profiles related to demographic transition using growth regression model adopted from scholars Cai and Wang (2005). Data is collected from31Chinese provinces and analyze using application of pooled, random and fixed panel data estimation model. Many scholars have projected that change in demographic especially in dependency ratio and birth rates will negatively impact the economic growth. Other characteristics of demography are examined in this research as well as non-demographic variables such as:government spending; investment; trade and the environment to determine how they influence growth rates.The results of the panel data analysis confirm the claim that features of demography such as dependency ratio and birth rate negatively influence growth rate of gross domestic product. Not only do the two variables slow down growth rates in China, but birth rate and child-dependency ratio are statistically significant. Even though old-age dependency ratio is negative it is statistically insignificant to the increase in growth rate. Similarly, though migration (in the form of urbanization) proved to be positively related, it is inconsequential to improvement in growth rate. The results also corroborated the claim that trade openness is good for economic growth and played an important role in China’s booming economy. Likewise, the arguments which posit that the development of many Asian countries especially China, due to high savings and investment in the local economy, is validated by the result. The model utilizes current investment and regress it on growth rate which is not only positive but also statistically significant. Overall it can be ascertained from the results of the study undertaken illustrates that the changes brought about by demographic transition as well as those that are as a result of economic improvements such as the environment and urbanization have had significant impact on the economy and will continue to do so in years to come.