IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/3633.html
   My bibliography  Save this paper

Investment and saving in China

Author

Listed:
  • Kuijs, Louis

Abstract

The author analyzes sectoral patterns of investment and saving in China-over time and compared with other countries-to shed light on the factors driving high investment and on how saving is channeled into investment. The findings inform several policy debates. Key findings include: (1) investment by enterprises distinguishes China from other countries and explains most of the variation over time; (2) high household saving explains only a part of the large difference in national saving between China and other countries-the majority is explained by high saving of the government and enterprises (through retained earnings); and (3) only about one-third of enterprise investment is financed via the financial sector, a lower share than in the early 1990s. The author also explores explanations behind high saving of the government and enterprises. His findings have three sets of policy implications. First, the identified financing patterns put in perspective the exposure of the financial sector to investment-related risks but, against a background of concerns about suboptimal allocation of capital, bring to the fore corporate governance, dividend policy, and transparency and accountability of public funds. Second, the findings suggest policy adjustments that would help in achieving the government's goals of improving the quality of growth and increasing the role of consumption. Third, long term saving prospects and the impact of financial sector and pension policies are discussed.

Suggested Citation

  • Kuijs, Louis, 2005. "Investment and saving in China," Policy Research Working Paper Series 3633, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3633
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2005/06/14/000016406_20050614112417/Rendered/PDF/wps3633.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Norman Loayza & Klaus Schmidt-Hebbel & Luis Servén, 2000. "What Drives Private Saving Across the World?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 165-181, May.
    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


    Cited by:

    1. Charles Yuji Horioka & Junmin Wan, 2007. "The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(8), pages 2077-2096, December.
    2. Xie, Shiqing & Mo, Taiping, 2015. "Differences in corporate saving rates in China: Ownership, monopoly, and financial development," China Economic Review, Elsevier, vol. 33(C), pages 25-34.
    3. Tam, Leona & Dholakia, Utpal M., 2011. "Delay and duration effects of time frames on personal savings estimates and behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 114(2), pages 142-152, March.
    4. Edward Whitfield, 2016. "China and the Great Doubling: Racing to the Top or Bottom of Global Labour Standards?," Global Policy, London School of Economics and Political Science, vol. 7(1), pages 37-45, February.
    5. Philip R. Lane & Sergio L. Schmukler, 2006. "The international financial integration of China and India," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
    6. Kumhof, Michael & Yan, Isabel, 2016. "Balance-of-payments anti-crises," Journal of Macroeconomics, Elsevier, vol. 48(C), pages 186-202.
    7. Olivier Blanchard & Francesco Giavazzi, 2006. "Rebalancing Growth in China: A Three-Handed Approach," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(4), pages 1-20.
    8. Chen, Binkai & Lu, Ming & Zhong, Ninghua, 2015. "How Urban Segregation Distorts Chinese Migrants’ Consumption?," World Development, Elsevier, vol. 70(C), pages 133-146.
    9. Jahangir Aziz & Li Cui, 2007. "Explaining China’s Low Consumption; The Neglected Role of Household Income," IMF Working Papers 07/181, International Monetary Fund.
    10. John Knight & Wei Wang, 2011. "China’s Macroeconomic Imbalances: Causes and Consequences," The World Economy, Wiley Blackwell, vol. 34(9), pages 1476-1506, September.
    11. Jahangir Aziz, 2006. "Rebalancing China’s Economy; What Does Growth Theory Tell Us?," IMF Working Papers 06/291, International Monetary Fund.
    12. Dollar, David & Kraay, Aart, 2006. "Neither a borrower nor a lender: Does China's zero net foreign asset position make economic sense?," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 943-971, July.
    13. Feltenstein, Andrew & Rochon, Céline & Shamloo, Maral, 2010. "High growth and low consumption in East Asia: How to improve welfare while avoiding financial failures," Journal of Development Economics, Elsevier, vol. 91(1), pages 25-36, January.
    14. Yilmaz Akyuz, 2015. "The Global Economic Crisis and Asian Developing Countries: Impact, Policy Response and Medium Term Prospects," Working Papers id:7062, eSocialSciences.
    15. 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.
    16. Shenglong Liu & Angang Hu, 2013. "Household Saving in China: The Keynesian Hypothesis, Life-Cycle Hypothesis, and Precautionary Saving Theory," The Developing Economies, Institute of Developing Economies, vol. 51(4), pages 360-387, December.
    17. Shaojie Zhou & Junsen Zhang, 2016. "Chinese Saving Rates from 1953 to 2012: Trends, Compositions and Prospects," Pacific Economic Review, Wiley Blackwell, vol. 21(2), pages 227-252, May.
    18. Qi, Li & Prime, Penelope B., 2009. "Market reforms and consumption puzzles in China," China Economic Review, Elsevier, vol. 20(3), pages 388-401, September.
    19. Kuijs, Louis, 2006. "How will China's saving-investment balance evolve ?," Policy Research Working Paper Series 3958, The World Bank.
    20. Steven A Barnett & Ray Brooks, 2006. "What’s Driving Investment in China?," IMF Working Papers 06/265, International Monetary Fund.

    More about this item

    Keywords

    Banks&Banking Reform; Economic Theory&Research; Economic Investment&Savings; Environmental Economics&Policies; International Terrorism&Counterterrorism;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:3633. 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: (Roula I. Yazigi). General contact details of provider: http://edirc.repec.org/data/dvewbus.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.