China's low fertility may not hinder future prosperity

China has the world's largest national population and is rapidly catching up with the United States in terms of having the status as the world's largest economy. In this context, recent reports about unexpectedly low levels of fertility have given rise to speculation that the resulting population stagnation/decline and rapid aging may pose a major obstacle to continued prosperity in the future. We show that, depending on the indicator of demographic dependency used, the future may look very different. When associated with rapid increases in human capital, low fertility rates may not pose such a significant obstacle to continued development over the coming decades. Whether this will be the case may have profound geopolitical and global economic consequences.