China’s High Saving Rate: Myth and Reality

Guonan Ma and Wang Yi

International Economics, 2010, issue 122, 5–39

Abstract: China’s saving rate is high from many perspectives – historical experience, international standards and model predictions. Furthermore, the average saving rate has been rising over time, with much of the increase taking place in the 2000s. What sets China apart from the rest of the world is that its rising aggregate saving has reflected high savings rates in all three sectors – corporate, household and government. Our evidence casts doubt on the proposition that distortions and subsidies account for China’s 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. Such structural factors suggest that the Chinese saving rate may peak in the medium term.

Keywords: Saving; Corporate; Household and government saving; Chinese economy (search for similar items in EconPapers)
JEL-codes: E20 E21 O11 O16 O53 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiie:2010-q2-122-1

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