Abstract
This paper analyzes whether China’s investment and savings rates are too high by considering the rate of return to investment and other factors. It also investigates the reasons for the rapid increase in the savings rate by using various sources of data and analytical tools. In particular, much attention is paid to the distribution of income among households, corporations, and the government, and to the labor income share. Policy proposals for structural adjustment are discussed based on the finding of the investigation.
Highlights
Since the start of the new century, China’s economic demand structure has undergone a very rapid change
The most important source we found of the decline in the labor income share is the structural transformation from agriculture to industry and services
The paper argues that the investment rate is too high because of the low return and because it is higher than the level that theoretically maximizes consumption
Summary
Since the start of the new century, China’s economic demand structure has undergone a very rapid change. Household consumption as a share of GDP declined from 46.4 % in 2000 to 33.8 % in 2010; national savings rate increased from 37.7 to 52.6 % in the same period.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
