China s High Saving Rate

China s High Saving Rate

Our evidence casts doubt on the proposition that distortions and subsidies account for China's rising corporate profits and high saving rate.

Author: Guonan Ma

Publisher:

ISBN: IND:30000111263087

Category: China

Page: 29

View: 923

The saving rate of China is high from many perspectives - historical experience, international standards and the predictions of economic models. Furthermore, the average saving rate has been rising over time, with much of the increase taking place in the 2000s, so that the aggregate marginal propensity to save exceeds 50%. What really sets China apart from the rest of the world is that the rising aggregate saving has reflected high savings rates in all three sectors - corporate, household and government. Moreover, adjusting for inflation alters interpretations of the time path of the propensity to save in the three sectors. Our evidence casts doubt on the proposition that distortions and subsidies account for China's rising corporate profits and high saving rate. Instead, we argue that tough corporate restructuring (including pension and home ownership reforms), a marked Lewis-model transformation process (where the average wage exceeds the marginal product of labour in the subsistence sector) and rapid ageing process have all played more important roles. While such structural factors suggest that the Chinese saving rate will peak in the medium term, policies for job creation and a stronger social safety net would assist the transition to more balanced domestic demand.
Categories: China

China s High Savings Drivers Prospects and Policies

China   s High Savings  Drivers  Prospects  and Policies

China’s high national savings rate—one of the highest in the world—is at the heart of its external/internal imbalances.

Author: Ms.Longmei Zhang

Publisher: International Monetary Fund

ISBN: 9781484388778

Category: Business & Economics

Page: 38

View: 489

China’s high national savings rate—one of the highest in the world—is at the heart of its external/internal imbalances. High savings finance elevated investment when held domestically, or lead to large external imbalances when they flow abroad. Today, high savings mostly emanate from the household sector, resulting from demographic changes induced by the one-child policy and the transformation of the social safety net and job security that occured during the transition from planned to market economy. Housing reform and rising income inequality also contribute to higher savings. Moving forward, demographic changes will put downward pressure on savings. Policy efforts in strengthening the social safety net and reducing income inequality are also needed to reduce savings further and boost consumption.
Categories: Business & Economics

The Chinese Corporate Savings Puzzle

The Chinese Corporate Savings Puzzle

China’s high corporate savings rate is commonly claimed to be a key driver for the country’s large current account surplus.

Author: Mr.Hui Tong

Publisher: International Monetary Fund

ISBN: 9781455210824

Category: Business & Economics

Page: 32

View: 836

China’s high corporate savings rate is commonly claimed to be a key driver for the country’s large current account surplus. The mainstream explanation for high corporate savings is a combination of windfall profits in state-owned firms, especially in resource sectors, and mis-governance of state-owned firms represented by their low dividend payout. The paper casts doubt on these views by comparing the savings of 1557 Chinese listed firms with those of 29330 listed firms from 51 other countries over 2002-07. First, Chinese firms do not have a significantly higher savings rate (as a share of total assets) than the global average because corporations in most countries have a high savings rate. The rising corporate savings rate is also consistent with a global trend. Second, there is no significant difference in the savings behavior and dividend patterns between Chinese majority state-owned and private listed firms, contrary to the received wisdom.
Categories: Business & Economics

Why Are Saving Rates So High in China

Why Are Saving Rates So High in China

Abstract: In this paper, we define â?

Author: Dennis Tao Yang

Publisher:

ISBN: OCLC:731746649

Category: Economics

Page: 46

View: 980

Abstract: In this paper, we define â??The Chinese Saving Puzzleâ?? as the persistently high national saving rate at 34â??53 percent of gross domestic product (GDP) in the past three decades and a surge in the saving rate by 11 percentage points from 2000â??2008. Using data from the Flow of Funds Accounts (FFA) and Urban Household Surveys (UHS) supplemented by the findings from existing studies, we analyze the sources and causes of China's high and rising saving rates in the government, corporate, and household sectors. Although the causes of China's high saving are complex, we suggest that the evolving economic, demographic, and policy trends in the internal and external environments of the Chinese economy will likely lead to a decline in national saving in the foreseeable future
Categories: Economics

Investment and Saving in China

Investment and Saving in China

"The author analyzes sectoral patterns of investment and saving in China-over time and compared with other countries-to shed light on the factors driving high investment and on how saving is channeled into investment.

Author: Louis Kuijs

Publisher:

ISBN: UCSD:31822030947790

Category: Electronic book

Page: 19

View: 607

"The author analyzes sectoral patterns of investment and saving in China-over time and compared with other countries-to shed light on the factors driving high investment and on how saving is channeled into investment. The findings inform several policy debates. Key findings include: (1) investment by enterprises distinguishes China from other countries and explains most of the variation over time; (2) high household saving explains only a part of the large difference in national saving between China and other countries-the majority is explained by high saving of the government and enterprises (through retained earnings); and (3) only about one-third of enterprise investment is financed via the financial sector, a lower share than in the early 1990s. The author also explores explanations behind high saving of the government and enterprises ... " -- Cover verso.
Categories: Electronic book

Precautionary Saving of Chinese and U S Households

Precautionary Saving of Chinese and U S  Households

We employ a model of precautionary saving to study why household saving rates are so high in China and so low in the US. The use of recursive preferences gives a convenient decomposition of saving into precautionary and non precautionary ...

Author: Horag Choi

Publisher:

ISBN: OCLC:892464876

Category: Finance, Personal

Page: 40

View: 725

We employ a model of precautionary saving to study why household saving rates are so high in China and so low in the US. The use of recursive preferences gives a convenient decomposition of saving into precautionary and non precautionary components. This decomposition indicates that over 80 percent of China's saving rate and nearly all of the US saving arises from the precautionary motive. The difference in the income growth rate between China and the US is vastly more important for explaining saving rate differences than differences in income risk. We estimate the preference parameters and find that Chinese and US households are more similar in their attitude toward risk than in their intertemporal substitutability of consumption.
Categories: Finance, Personal

China s High Savings Drivers Prospects and Policies

China   s High Savings  Drivers  Prospects  and Policies

China’s high national savings rate—one of the highest in the world—is at the heart of its external/internal imbalances.

Author: Ms.Longmei Zhang

Publisher: INTERNATIONAL MONETARY FUND

ISBN: 1484388771

Category: Business & Economics

Page: 38

View: 840

China’s high national savings rate—one of the highest in the world—is at the heart of its external/internal imbalances. High savings finance elevated investment when held domestically, or lead to large external imbalances when they flow abroad. Today, high savings mostly emanate from the household sector, resulting from demographic changes induced by the one-child policy and the transformation of the social safety net and job security that occured during the transition from planned to market economy. Housing reform and rising income inequality also contribute to higher savings. Moving forward, demographic changes will put downward pressure on savings. Policy efforts in strengthening the social safety net and reducing income inequality are also needed to reduce savings further and boost consumption.
Categories: Business & Economics

The Role of Household Saving in the Economic Rise of China

The Role of Household Saving in the Economic Rise of China

The saving rate in China is high by historical and international norms.

Author: Steven Lugauer

Publisher:

ISBN: OCLC:1309060581

Category:

Page: 24

View: 433

The saving rate in China is high by historical and international norms. The high saving rate has funded capital accumulation which in turn has been the primary driver of China's economic growth. We review the evidence on Chinese household saving and conduct a small study to assess the importance of the precautionary motive for saving.
Categories:

Explaining China s Low Consumption The Neglected Role of Household Income

Explaining China s Low Consumption  The Neglected Role of Household Income

The Chinese government has recently focused on the need to increase consumption to rebalance the economy.

Author: Jahangir Aziz

Publisher: International Monetary Fund

ISBN: UCSD:31822034969576

Category: Business & Economics

Page: 42

View: 563

The Chinese government has recently focused on the need to increase consumption to rebalance the economy. A widely held view is that despite China's remarkably high growth, the share of consumption in total expenditure has been low and declining due to high and rising saving rate of Chinese households as uncertainty over provision of pensions, and healthcare and education costs have increased since the mid-1990s. This paper finds that the rise in saving rate has been a minor factor. Much larger has been the role of the declining share of household income in national income, which has occurred across-the-board in wages, investment income, and government transfers. The paper finds that financial sector weaknesses, by restricting firms' access to bank financing for working capital, have played quantitatively a major role in keeping wage and investment income shares low and on a declining trend.
Categories: Business & Economics