Population, Aging, and the Savings Glut
By Arnold Kling
China’s national pension system as of 2025 promises today to be more or less the same system that has always provided for the country’s elderly and infirm: namely, the family unit. But herein lies a problem: The “success” of the Chinese government’s continuing antinatal population drive will necessarily translate in coming decades into a plummeting ratio of working-age children to elderly parents. Whereas the average Chinese woman who celebrated her sixtieth birthday in the early 1990s had borne five children during her lifetime, her counterpart in 2025 will have had fewer than two.
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However, one thing that occurs to me is that perhaps economists are wrong to argue that the flow of savings from China to the United States is irrational. If population aging promises to be more problematic for China than for the U.S., then it makes sense for them to have a higher savings rate. Perhaps Eberstadt has provided a rationale for the savings glut.