Journal Article

Fiscal implications of population aging and social sector expenditure in China

China’s population aging and expansion of social spending following decades of rapid economic growth will undoubtedly lead to future increases in public expenditure. This article presents scenarios for future government expenditure in the main components of the social sector—education, health care and pensions. Scenario results reveal that if China gradually increases per-beneficiary spending in these areas by 2030 to the average level of OECD countries in 2009—an assumption that is in line with China’s aspiration to be a high-income society—the combined spending in these three areas as a share of GDP could double, from 10 percent in 2014 to 20 percent in 2030, and triple to over 30 percent by 2050. The trends documented here face Chinese policy makers with hard choices and, absent substantial increase in government revenues as a share of GDP, they portend far-reaching economic, social, and political implications.

Published in a peer-reviewed journal of the Population Council.