Advanced Search
MyIDEAS: Login to save this paper or follow this series

Aggregate Savings and External Imbalances in China

Contents:

Author Info

  • Yang, Dennis T.

    ()
    (University of Virginia)

Abstract

Over the last decade, the internal and external macroeconomic imbalances in China have risen to unprecedented levels. In 2008, China's national savings rate soared to over 53 percent of its GDP, whereas its current account surplus exceeded 9 percent of GDP. The current paper presents a unified framework for understanding the structural causes of these imbalances. I argue that the imbalances are attributable to a set of policies and institutions embedded in the economy. Moreover, the accession of China to the World Trade Organization has dramatically amplified the effects of these structural distortions. I document major trends in aggregate savings, investment, trade, and net foreign asset positions in China, and explore options for policy reforms aimed at rebalancing the Chinese economy.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp6964.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6964.

as in new window
Length: 40 pages
Date of creation: Oct 2012
Date of revision:
Publication status: published in: Journal of Economic Perspectives, 2012, 26 (4), 125–146.
Handle: RePEc:iza:izadps:dp6964

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: aggregate savings; current account; income distribution; structural distortions; trade policies; China;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2009. "China's Current Account and Exchange Rate," CESifo Working Paper Series 2587, CESifo Group Munich.
  2. Chamon, Marcos & Prasad, Eswar, 2007. "Why Are Saving Rates of Urban Households in China Rising?," IZA Discussion Papers 3191, Institute for the Study of Labor (IZA).
  3. Charles Yuji Horioka & Junmin Wan, 2007. "The determinants of household saving in China: a dynamic panel analysis of provincial data," Working Paper Series, Federal Reserve Bank of San Francisco 2007-28, Federal Reserve Bank of San Francisco.
  4. Ge, Suqin & Yang, Dennis T., 2012. "Changes in China's Wage Structure," IZA Discussion Papers 6492, Institute for the Study of Labor (IZA).
  5. Aart Kraay, 2000. "Household Saving in China," World Bank Economic Review, World Bank Group, World Bank Group, vol. 14(3), pages 545-570, September.
  6. Dennis Tao Yang & Junsen Zhang & Shaojie Zhou, 2010. "Why are Saving Rates so High in China?," Working Papers 312010, Hong Kong Institute for Monetary Research.
  7. Knight, John & Wang, Wei, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 15/2011, Bank of Finland, Institute for Economies in Transition.
  8. BAI, Chong-En & QIAN, Zhenjie, 2010. "The factor income distribution in China: 1978-2007," China Economic Review, Elsevier, Elsevier, vol. 21(4), pages 650-670, December.
  9. Franco Modigliani & Shi Larry Cao, 2004. "The Chinese Saving Puzzle and the Life-Cycle Hypothesis," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 145-170, March.
  10. Guonan Ma & Wang Yi, 2010. "China's high saving rate: myth and reality," BIS Working Papers 312, Bank for International Settlements.
  11. Zhang, Haiyan, 2008. "Corporate governance and dividend policy: A comparison of Chinese firms listed in Hong Kong and in the Mainland," China Economic Review, Elsevier, Elsevier, vol. 19(3), pages 437-459, September.
  12. Giovanni Ferri & Li-Gang Liu, 2010. "Honor Thy Creditors Beforan Thy Shareholders: Are the Profits of Chinese State-Owned Enterprises Real?," Asian Economic Papers, MIT Press, MIT Press, vol. 9(3), pages 50-71, October.
  13. Yiping Huang & Kunyu Tao, 2010. "Factor Market Distortion and the Current Account Surplus in China," Asian Economic Papers, MIT Press, MIT Press, vol. 9(3), pages 1-36, October.
  14. Guonan Ma & Haiwen Zhou, 2009. "China's Large and Rising Net Foreign Asset Position," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(5), pages 1-21.
  15. Morris Goldstein & Nicholas R. Lardy, 2009. "The Future of China's Exchange Rate Policy," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number pa87, July.
  16. Chao, Chi-Chur & Yu, Eden S.H. & Yu, Wusheng, 2006. "China's import duty drawback and VAT rebate policies: A general equilibrium analysis," China Economic Review, Elsevier, Elsevier, vol. 17(4), pages 432-448.
  17. Shang-Jin Wei & Xiaobo Zhang, 2009. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," NBER Working Papers 15093, National Bureau of Economic Research, Inc.
  18. Kjetil Storesletten & Fabrizio Zilibotti & Zheng Song, 2009. "Growing like China," 2009 Meeting Papers, Society for Economic Dynamics 912, Society for Economic Dynamics.
  19. Elena Ianchovichina, 2007. "Are duty drawbacks on exports worth the hassle?," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 40(3), pages 881-913, August.
  20. Liugang Sheng, 2013. "Did China diversify its foreign reserves?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 102-125, 01.
Full references (including those not matched with items on IDEAS)

Citations

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

Cited by:
  1. Zuzana Fungácová & Laurent Weill, 2014. "Understanding Financial Inclusion in China," Working Papers of LaRGE Research Center, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg 2014-06, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
  2. Hans-Jörg Schmerer & Luhang Wang, 2014. "Firm Performance and Trade with Low-Income Countries: Evidence from China," CESifo Working Paper Series 4934, CESifo Group Munich.
  3. Stephane Guibaud & Keyu Jin & Nicolas Coeurdacier, 2011. "Credit Constraints and Growth in a Global Economy," 2011 Meeting Papers 1040, Society for Economic Dynamics.
  4. Joshua Aizenman & Yothin Jinjarak & Nancy P. Marion, 2013. "China's Growth, Stability, and Use of International Reserves," NBER Working Papers 19739, National Bureau of Economic Research, Inc.
  5. Mehlum, Halvor & Torsvik, Ragnar & Valente, Simone, 2013. "China's Savings Multiplier," Memorandum, Oslo University, Department of Economics 17/2013, Oslo University, Department of Economics.
  6. Sarlea Mihaela & Manta Stefan George & Vaidean Viorela Ligia, 2013. "The Role Of Savings Rate In Deepening Macroeconomic Imbalances In China," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 1018-1027, July.
  7. Rod Tyers, 2014. "International Effects of China’s Rise and Transition: Neoclassical and Keynesian Perspectives," CAMA Working Papers 2014-05, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  8. Ma, Guonan & Yang, Dennis T., 2013. "China's High Saving Puzzle," IZA Discussion Papers 7223, Institute for the Study of Labor (IZA).
  9. Vipin Arora & Rod Tyers & Ying Zhang, 2014. "Reconstructing the Savings Glut: The Global Implications of Asian Excess Saving," CAMA Working Papers 2014-20, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  10. Rod Tyers, 2014. "Analysing the Short Run Effects of China’s Economic Reform Agenda," CAMA Working Papers 2014-29, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  11. Bonatti, Luigi & Fracasso, Andrea, 2014. "Modeling the Transition Towards Renminbi's Full Convertibility: Implications for China’s Growth," MPRA Paper 54129, University Library of Munich, Germany.
  12. Julan Du & Hongsheng Fang & Xiangrong Jin, 2013. "Chinese Political and Economic Governance System and the Imbalance between Consumption and Investment," Working Papers 232013, Hong Kong Institute for Monetary Research.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6964. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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