Corporate Saving, Household Saving, and Gross National Savings: Analysis by Provincial Panel and Time Series Data in China

Abstract

The current account imbalance between the U.S. and China is the principal cause of the ongoing trade friction. China’s domestic savings, which have exceeded domestic investment for many years, are flowing into the U.S. We sought to explain why China saved so much in terms of all of gross national, household, corporate, government, and other savings from 1952 to 2020. We prepared two sets of time-series data based on the SNA and deposits in domestic banks, and compared them. Over the 69 years (1952-2020), corporate saving was the largest source of domestic saving, except from 1988-2007. Household saving was determined by income growth, consumption habits, income distribution, social security payments, the desire to bequeath money, the one-child policy, and speculative saving. To explore corporate saving, we performed panel regression analysis by estimating provincial corporate saving by “certain-sized industries” from 2000 to 2010. All of the Tobin marginal Q, minimum wage growth, the private enterprise ratio, the corporate income tax rate, and population growth significantly impacted corporate saving.