How will China's saving-investment balance evolve ?
AbstractThis paper investigates how China's saving, investment, and saving-investment balance will evolvein 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.
Download InfoIf 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.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3958.
Date of creation: 01 Jul 2006
Date of revision:
Economic Theory&Research; Investment and Investment Climate; Economic Investment&Savings; Non Bank Financial Institutions; Contractual Savings;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-09 (All new papers)
- NEP-CBA-2006-07-09 (Central Banking)
- NEP-CNA-2006-07-09 (China)
- NEP-DEV-2006-07-09 (Development)
- NEP-FMK-2006-07-09 (Financial Markets)
- NEP-SEA-2006-07-09 (South East Asia)
- NEP-TRA-2006-07-09 (Transition Economics)
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.:
- Hans Fehr & Sabine Jokisch & Laurence J. Kotlikoff, 2005.
"Will China Eat Our Lunch or Take Us to Dinner? – Simulating the Transition Paths of the U.S., EU, Japan, and China,"
Boston University - Department of Economics - Macroeconomics Working Papers Series
WP2005-009, Boston University - Department of Economics.
- Hans Fehr & Sabine Jokisch & Laurence J Kotlikoff, 2006. "Will China Eat Our Lunch or Take Us to Dinner? Simulating the Transition Paths of the US, EU, Japan and China," RBA Annual Conference Volume, in: Christopher Kent & Anna Park & Daniel Rees (ed.), Demography and Financial Markets Reserve Bank of Australia.
- Hans Fehr & Sabine Jokisch, & Laurence J. Kotlikoff, 2005. "Will China Eat Our Lunch or Take Us to Dinner?—Simulating the Transition Paths of the U.S., E.U., Japan, and China," Working Papers wp102, University of Michigan, Michigan Retirement Research Center.
- Hans Fehr & Sabine Jokisch & Laurence J. Kotlikoff, 2005. "Will China Eat Our Lunch or Take us to Dinner? - Simulating the Transition Paths of the U.S., Eu, Japan and China," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-151, Boston University - Department of Economics.
- Chow, Gregory C., 1993. "How and why China succeeded in her economic reform," China Economic Review, Elsevier, vol. 4(2), pages 117-128.
- Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 1999.
"What Drives Private Saving Across the World?,"
Working Papers Central Bank of Chile
47, Central Bank of Chile.
- LAN LU & IAN M. McDONALD, 2006. "Does China Save Too Much?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 51(03), pages 283-301.
- Zuliu F. Hu & Mohsin S. Khan, 1997.
"Why Is China Growing So Fast?,"
IMF Staff Papers,
Palgrave Macmillan, vol. 44(1), pages 103-131, March.
- Kuijs, Louis, 2005. "Investment and saving in China," Policy Research Working Paper Series 3633, The World Bank.
- Lipschitz, Leslie & Rochon, Céline & Verdier, Geneviève, 2011. "A real model of transitional growth and competitiveness in China," Journal of Asian Economics, Elsevier, vol. 22(4), pages 267-283, August.
- Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2006.
"Can China’s Growth be Sustained? A Productivity Perspective,"
Working Papers in Economics
236, University of Gothenburg, Department of Economics.
- Zheng, Jinghai & Bigsten, Arne & Hu, Angang, 2009. "Can China's Growth be Sustained? A Productivity Perspective," World Development, Elsevier, vol. 37(4), pages 874-888, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.