RDP 2025-08: Ageing and Economic Growth in China 5. Conclusion and Implications for Australia

The estimates in this paper suggest that among China's provinces an increase in the old-age ratio leads to lower nominal GDP per capita growth compared to if there had been no such increase. Applying these estimates nationally suggests that the projected increase in China's old-age population over the coming decade will act as a headwind to growth. However, there are policy options available for authorities to somewhat cushion this impact on the economy. Authorities have so far responded with policies which may help slow the decline in the working-age population, such as increasing the retirement age and introducing policies aimed at increasing the birthrate. Authorities have also signalled possible productivity-enhancing reforms which could put upward pressure on economic growth to counteract the negative impact of ageing on growth. Additionally, not all sectors stand to lose from the demographic transformation. These estimates suggest that while ageing poses a headwind to the construction sector, this trend may lead to an increase in the contribution of the services sector to the economy.

The Australian economy has previously been a significant beneficiary of Chinese commodity demand, especially for use in the construction sector. The estimates in this paper suggest that shifting demographics are likely to reduce demand for these kind of exports to China from Australia in the coming decades. However, there remain opportunities for countries such as Australia to benefit from a growing share of services consumption in China, including through business opportunities in market segments that serve the elderly population in China, such as health and aged care.