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Why is the Chinese Saving Rate so High?

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  • Guonan Ma
  • Wang Yi

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 Lewismodel 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 over the coming years.

Suggested Citation

  • Guonan Ma & Wang Yi, 2011. "Why is the Chinese Saving Rate so High?," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 12(1), pages 1-26, January.
    • Handle: RePEc:wej:wldecn:452
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    Cited by:

    1. Gang Chen & Brett Inder & Paula Lorgelly & Bruce Hollingsworth, 2013. "The Cyclical Behaviour Of Public And Private Health Expenditure In China," Health Economics, John Wiley & Sons, Ltd., vol. 22(9), pages 1071-1092, September.
    2. Mariana Stanciu, 2016. "Evolution of the family structures in romania," Journal of Community Positive Practices, Catalactica NGO, issue 4, pages 80-100.
    3. Karl Farmer & Matthias Schelnast, 2013. "Public Debt Reduction in Advanced Countries and Its Impact on Emerging Countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(2), pages 167-188, May.

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