How Will China's Saving-Investment Balance Evolve?

By Louis Kuijs. 2006

158 citations recorded by the source corpus.

This paper investigates how China's saving, investment, and saving-investment balance will evolve in the decades ahead. Household saving in China is relatively high compared with OECD countries. However, much of China's high economywide saving, and the difference between China and other countries, are due to unusually high enterprise and government saving. Moreover, cross-country empirical analysis shows that economywide saving and investment in China are higher than what would be expected, even adjusting for differences in economic structure. Combined, these findings suggest that much of China's high saving is the result of policies particular to China. Looking ahead, the econometric results suggest that purely on the basis of projected structural developments-including development, changes in economic structure, urbanization, and demographics-saving and investment would both decline only mildly in the coming two decades, with ambiguous impact on the current account surplus. However, the potential effect on saving, investment, and the saving-investment balance of several policy adjustments could be large. Several of these policies are identified and their likely impact assessed and quantified. This exercise suggests that rebalancing along these lines should reduce both saving and the current account surplus over time, although the surplus is unlikely to turn into a deficit soon.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/3bf4a22cd144298a685010e1ddd412bf3dbc98b6

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Citations in the corpus

China's outward foreign direct investment: Location choice and firm ownership (2012, background): “Given the central government’s support and the lack of corporate governance mechanisms (Kuijs, 2006), SASAC controlled firms can seize these assets even if they are located in high-risk countries.”
Why are Saving Rates of Urban Households in China Rising? (2008, unknown): “We believe this is the "rst detailed examination of Chinese household savings behavior using micro data over a long span.1 1 Most previous studies have relied on aggregate data (e.g., Franco Modigliani and Shi Larry Cao 2004; Louis Kuijs 2006) or provincial-level data (e.g., Yingyi Qian 1988; Aart K”
The real exchange rate and economic development (2012, background): “6) illustrates the co-movement of these variables in China in recent years, and Kuijs (2006) nds that while Chinese household saving out of disposable income (which includes some interest, rent and prot income) is high, what makes the saving to GDP ratio exceptional is the presence of high enterpr”
The factor income distribution in China: 1978–2007 (2010, background): “In turn, Kuijis (2006) argues that the consumption ratio has declined because the share of China's household income has fallen. Since labor compensation is the main source of household income, the decline in the labor share is, of course, a key contributor to the drop in household income as a share ”