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China’s Household Balance Sheet: Accounting Issues, Wealth Accumulation, and Risk Diagnosis

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  • Li, Cheng

Abstract

In this paper, we compile China’s household balance sheet and apply this perspective to the analysis of household financial conditions. Specifically, we first address some technical issues on the balance sheet accounts, and detail the estimations of two important asset items, “dwellings” and “automobiles.” Next, through reading the sheets, we provide an international comparative analysis, and show: (1) China’s households are still on their early stage of wealth accumulation, and this trend is associated with a changing structure in favour of financial assets. (2) Although being subject to relatively low insolvency and liquidity risks, the sector has experienced, generally contrary to major developed countries, a climbing leverage cycle since the global financial crisis. These findings imply that China’s policymakers should, on the one hand, make further efforts to help households accumulate wealth with an improved structure in terms of liquidity and risk diversification, and on the other hand need to pay high attention to the increasing household financial stress and the potential risk contagion.

Suggested Citation

  • Li, Cheng, 2017. "China’s Household Balance Sheet: Accounting Issues, Wealth Accumulation, and Risk Diagnosis," MPRA Paper 79838, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:79838
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    File URL: https://mpra.ub.uni-muenchen.de/79838/1/MPRA_paper_79838.pdf
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    More about this item

    Keywords

    Balance sheet; Household sector; Wealth accumulation; Debt risks; Financial deepening;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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