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National savings rate and sectoral income distribution: An empirical look at China

Author

Listed:
  • Chang, Xiao
  • An, Tongliang
  • Tam, Pui Sun
  • Gu, Xinhua
Abstract
China's saving rate is found to be higher than predictions of empirical estimations based on conventional models of consumption. This problem has been recently admitted as arising from research attention biased towards household saving, yet savings by the corporate and public sectors (termed the non-household sector) may be more important in China. We find strong evidence that the biased distribution of national income towards the non-household sector is a key determinant of high aggregate saving in China, with this situation reinforced by its huge surplus labor. Such a sectoral perspective, albeit useful for elucidating Chinese savings, was previously used in descriptive discussions. This perspective is formally taken into account in our empirical study generating significant findings. We also show that high Chinese savings have more or less to do with other economic, demographic, and institutional factors as identified in the literature.

Suggested Citation

  • Chang, Xiao & An, Tongliang & Tam, Pui Sun & Gu, Xinhua, 2020. "National savings rate and sectoral income distribution: An empirical look at China," China Economic Review, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:chieco:v:61:y:2020:i:c:s1043951x19300021
    DOI: 10.1016/j.chieco.2019.01.002
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    References listed on IDEAS

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    More about this item

    Keywords

    China; Sectoral income distribution; Sectoral saving propensity; Sectoral and national saving rates;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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