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The Return to Capital in China

Author

Listed:
  • 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.

Suggested Citation

  • Chong-En Bai & Chang-Tai Hsieh & Yingyi Qian, 2006. "The Return to Capital in China," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(2), pages 61-102.
    • Handle: RePEc:bin:bpeajo:v:37:y:2006:i:2006-2:p:61-102
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    More about this item

    Keywords

    macroeconomics; China; Capital; Chinese; China investment rate;
    All these keywords.

    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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