The Saving Motive in China
The Saving Motive in mainland China: Rising Sex Ratio Imbalance and Savings Rates
High savings rates in certain countries are said to be a major contributor to the recent housing price bubbles and the global financial crisis by depressing long term interest rate in the last decade (Greenspan, 2009). The Chinese national savings rate is at about 50% of the GDP in 2007.
The high savings rate in China may have global impact and it may be due to the rising sex ratio imbalance in China as described in a NBER working paper recently.
This paper proposes a saving motive as a new explanation to the problem of property bubbles: "as the country experiences a rising sex ratio imbalance, the increased competition in the marriage market has induced the Chinese, especially parents with a single son, to postpone consumption in favor of wealth accumulation. The pressure on savings spills over to other households through higher costs of house purchases."
The paper has shown evidence to support this hypothesis. The factor can account for about 50% of the actual increase in the household savings rate during 1990-2007. "In 2007, the household savings was about 30% of the household disposal income in mainland China" as said in the Paper.
High savings rates in certain countries are said to be a major contributor to the recent housing price bubbles and the global financial crisis by depressing long term interest rate in the last decade (Greenspan, 2009). The Chinese national savings rate is at about 50% of the GDP in 2007.
The high savings rate in China may have global impact and it may be due to the rising sex ratio imbalance in China as described in a NBER working paper recently.
This paper proposes a saving motive as a new explanation to the problem of property bubbles: "as the country experiences a rising sex ratio imbalance, the increased competition in the marriage market has induced the Chinese, especially parents with a single son, to postpone consumption in favor of wealth accumulation. The pressure on savings spills over to other households through higher costs of house purchases."
The paper has shown evidence to support this hypothesis. The factor can account for about 50% of the actual increase in the household savings rate during 1990-2007. "In 2007, the household savings was about 30% of the household disposal income in mainland China" as said in the Paper.
Is it logicially relevant by the "Paradox of Thrift" in economics (which has the same implication on the "Paradox of Deleveraging") ?
'Thriftiness, while a virtue for the individual, is disastrous for an economy.’
The result of thriftiness as falling of saving is paradoxical because an increase in the desire to save autonomously leads to a plunge in national income eventually and saving drops in turn.
posted by William, Wong Tak Choi at 4:47 下午
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