The Growth Of China 's Consumption

963 WordsNov 12, 20154 Pages
In order to increase China’s consumption, some current literatures come up with several policy suggestions to reduce China’s high savings rate and therefore stimulate China’s consumption. Anderson (2007) points out that the bulk of excess savings has come from Chinese firms as they “expropriate” market share and profits from the rest of the world. This implies that the sudden appearance of China’s imbalance over the past few years, the sharply rising trade surplus and the implied dramatic increase in domestic savings relative to the already very high mainland investment levels, was not caused by weak consumers. Instead, the bulk of the evidence points to Chinese companies and rising corporate savings as the source of the problem. In particular, the banking system data show that the household share in total deposits has fallen since the beginning of the decade, offset by a rise in the enterprise deposit share. This is confirmed by flow of funds estimates, which also indicate that while household and government saving rates are generally high, neither ratio has changed much over the past five years. Instead, the real driver of the recent Chinese "savings boom" is the corporate sector, in which the estimated gross saving rate has shot up by nearly 7 percentage points since the beginning of the decade By analyzing sectoral trends in investment and saving and the resulting sectoral saving-investment balances over, Kuijs (2005) also agree with Anderson’s argument: the China’s
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