IDEAS home Printed from https://ideas.repec.org/p/hal/cesptp/hal-01450935.html
   My bibliography  Save this paper

The Chinese Savings Puzzles

Author

Listed:
  • Jean-Pierre Laffargue

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Eden S. H. Yu

Abstract

The Chinese savings puzzle is defined by its increasing national savings rate since the early 1990s and reaching an unusually high level in recent years. There are two main causes for this puzzle. The first one is the high and increasing share of Chinese firms and financial institutions in the national disposable income (these agents have no final consumption and so save their whole disposable income). This can be partly explained by an uneven sharing of value added, which favors profit to the detriment of wages, due to the high and increasing supply of labor in urban areas. The high coprporate savings also results from the low distribution of firms' income. State-owned enterprises (SOEs) generally have little incentive to distribute dividends and those that are distributed, are usually reinvested; private firms face rationing in the credit market and need to finance a bulk of investment with their own retained earnings. The second cause of China's savings puzzle relates to the increasing and high household saving rate. This can be explained by the life-cycle hypothesis while taking into account of a set of pertinent Chinese factors, such as the one-child policy, which induces parents to save more in the absence of sufficient children to support their post-retirement life, and the necessity for households to accumulate enough savings in order to buy a house when the mortgage market is still limited. A complementary explanation is the higher precautionary savings accumulated by households to prepare for contingencies, e.g. unemployment and health risks.

Suggested Citation

  • Jean-Pierre Laffargue & Eden S. H. Yu, 2015. "The Chinese Savings Puzzles," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01450935, HAL.
  • Handle: RePEc:hal:cesptp:hal-01450935
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chang, Xiao & An, Tongliang & Tam, Pui Sun & Gu, Xinhua, 2020. "National savings rate and sectoral income distribution: An empirical look at China," China Economic Review, Elsevier, vol. 61(C).
    2. Qingyou Yan & Chao Qin, 2017. "Environmental and Economic Benefit Analysis of an Integrated Heating System with Geothermal Energy—A Case Study in Xi’an China," Energies, MDPI, vol. 10(12), pages 1-16, December.
    3. Chang, Yuk Ying & Anderson, Hamish & Shi, Song, 2018. "China and international housing price growth," China Economic Review, Elsevier, vol. 50(C), pages 294-312.
    4. Zefang Zhao & Yanlong Guo & Haiyan Wei & Qiao Ran & Wei Gu, 2017. "Predictions of the Potential Geographical Distribution and Quality of a Gynostemma pentaphyllum Base on the Fuzzy Matter Element Model in China," Sustainability, MDPI, vol. 9(7), pages 1-15, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:cesptp:hal-01450935. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.