China is in a race between its slowing down economic growth and accelerating population aging. Based on macro data from national accounts and micro data from national household surveys, this research applies the National Transfer Account framework to examine recent changes in income and consumption at both the aggregate and individual levels and project the effect of population aging on economic profiles.
The findings show that recent rapid economic growth has resulted in a sizable lifecycle surplus, with labor income far exceeding consumption. With expected increases in consumption, as shown in the historical experience of Taiwan, and with accelerating population aging, however, this surplus is expected to be erased before 2035. China’s three-decade long economic boom has led to an age of abundance, but that era will most likely to end in front of the eyes of the current young generation.