Investment and Saving in China

By Louis Kuijs. 2005

145 citations recorded by the source corpus.

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. His findings have three sets of policy implications. First, the identified financing patterns put in perspective the exposure of the financial sector to investment-related risks but, against a background of concerns about suboptimal allocation of capital, bring to the fore corporate governance, dividend policy, and transparency and accountability of public funds. Second, the findings suggest policy adjustments that would help in achieving the government's goals of improving the quality of growth and increasing the role of consumption. Third, long term saving prospects and the impact of financial sector and pension policies are discussed.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/9d79c661654eade1740debda5d9aba581243773c

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

Citations in the corpus

Why Has China Grown so Fast? The Role of Physical and Human Capital Formation (2011, unknown): “Government saving has also been high since 1978 as a result of a policy favouring government-financed investment over government consumption (Kuijs, 2005).”
Growing Like China (2011, unknown): “Louis Kuijs ( 2005 ) shows that household and enterprise saving rates in China are, respectively, 11.8 and 8.6 percentage points higher than those in the United States.”
How Will China's Saving-Investment Balance Evolve? (2006, unknown): “10 Typically a statistical discrepancy appears when the flow information is combined with the “below the line” information on changes in financial assets. percentage point of GDP more than those in Korea and 23 pp more than those in the US (Kuijs (2005)).”
The impact of digital finance on household consumption: Evidence from China (2020, background): “Existing research on inadequate consumption has suggested that liquidity constraints (Kuijs, 2005), imperfect security systems (Meng, 2003), and income inequality (Schmidt-Hebbel and Serven, 2000) are important enforcing factors for inadequate consumption.”
Rebalancing Growth in China: A Three-Handed Approach (2006, background): “Source: Kuijs, 2005 Why is household saving so high?”
Shifting sources and uses of profits: sustaining US financialization with global value chains (2008, background): “One response, proposed by those on both sides of the Western political spectrum, would be more government spending out of these profits, for example on a greater public provision of social protection (see Kujis, 2005; Hung, 2007).”