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The Return to Capital in China

Author Info

Listed author(s):
  • Chong-En Bai

    (Tsinghua University)

  • Chang-Tai Hsieh

    (University of California, Berkeley)

  • Yingyi Qian

    (University of California, Berkeley)

Abstract

China’s investment rate is one of the highest in the world, a fact that leads one to suspect that the return to capital in China must be quite low. Using data from China’s national accounts, this paper estimates the return to capital in China. We find that the aggregate annual return to capital averaged 25 percent during 1978-93, fell during 1993-98, and has remained roughly stable at around 20 percent since 1998. Thus the aggregate return to capital does not appear to be significantly lower in China than in the rest of the world. We also find that the dispersion in the return to capital across Chinese provinces has fallen since 1978.

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File URL: http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2006_2_bpea_papers/2006b_bpea_bai.pdf
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Article provided by Economic Studies Program, The Brookings Institution in its journal Brookings Papers on Economic Activity.

Volume (Year): 37 (2006)
Issue (Month): 2 ()
Pages: 61-102

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Handle: RePEc:bin:bpeajo:v:37:y:2006:i:2006-2:p:61-102
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Keywords: macroeconomics; China; Capital; Chinese; China investment rate;

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Find related papers by JEL classification:
  • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
  • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
  • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
  • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
  • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
  • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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  1. Boyreau-Debray, Genevieve & Wei, Shang-Jin, 2004. "Pitfalls of a State-Dominated Financial System: The Case of China," CEPR Discussion Papers 4471, C.E.P.R. Discussion Papers.
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  8. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
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  10. Ben S. Bernanke & Kenneth Rogoff, 2002. "Editorial in "NBER Macroeconomics Annual 2001, Volume 16"," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 1-6 National Bureau of Economic Research, Inc.
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  12. Ben S. Bernanke & Refet S. Gürkaynak, 2002. "Is Growth Exogenous? Taking Mankiw, Romer, and Weil Seriously," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 11-72 National Bureau of Economic Research, Inc.
  13. Zhang, Xiaobo & Tan, Kong-Yam, 2004. "Blunt to sharpened razor," DSGD discussion papers 13, International Food Policy Research Institute (IFPRI).
  14. Gregory C. Chow, 1993. "Capital Formation and Economic Growth in China," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 809-842.
  15. Alwyn Young, 2003. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1220-1261, December.
  16. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April.
  17. 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.
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