China’s savings to remain high – New Economist

China’s high household saving is largely due to unusually high enterprise and government saving. A new World Bank paper by Louis Kuijs asks: How will China’s saving-investment balance evolve? The answer is that “much of China’s high saving is the result of policies particular to China”, and that these very high levels of saving and investment won’t decline much without active policy measures:

much of China’s high saving is the result of policies particular to China. Looking ahead, the econometric results suggest that purely on the basis of projected structural developments -including development, changes in economic structure, urbanization, and demographics – saving and investment would both decline only mildly in the coming two decades, with ambiguous impact on the current account surplus. [Full Text]

Also see China’s banking reform – the lowdown

August 6, 2006 6:22 AM
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Categories: Economy