In recent years, China s economic growth has triggered off a lot of attentions from other countries. The personal saving rate has increased sharply, and it is now at a really high level compared with saving behavior with other developing countries.At the same time most of countries realized that the issue will become increasingly severer with acceleration of aging population in the world, no exception to China. The ageing of the population and its decline influence the investment rate, the growth rate of the economy, the demand for financial assets, and its composition. In this thesis, it will apply practical experiences and data from China to expand discussion of Feldstein s model. The first section quotes The World Bank s suggestion as a source of reference to presents roughly about pension system and saving behavior current situation in China. The majority of the existing literature is developed for the case study in only a few developing countries, therefore, before we initiate the empirical study, it is necessary to be aware of background of pension reform evolution and fundamental structure.
The Second section will be most crucial part of this thesis, this part analyses and estimates models by using Feldstein s extended life cycle model which we will include establishment of variables of disposable income, house hold wealth, the future retirement of the present value of insurance, the unemployment rate and the degree of opening to the outside world. Despite inadequate of numerical data we selected census information on the fifth of the provinces 2000-2006 age, gender population forecast, and the introduction of sub-provincial level of wages, wage growth, wage replacement rate of pensions and the discount rate to estimate respectively the present value of pension benefits by provinces.
The third section which is the last Chapter will give some comments and draw a conclusion. In this paper, the time-series data from 2000-2006 was used for the panel data regression and some of results were demonstrated to be consistent with the calculus result from Feldstein s paper in 1974, 1996.