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Households' savings in China

Author

Listed:
  • Riccardo Cristadoro

    (Bank of Italy)

  • Daniela Marconi

    (Bank of Italy)

Abstract

This paper studies the determinants of Chinese households� saving. Domestic saving in China is the highest in the world in terms of GDP and it is mirrored in a large and persistent current account surplus. First, we show that notwithstanding the rising contribution of government and firms to national savings, they stand out because of households� behaviour. Our econometric analysis proceeds from the work of Modigliani and Cao (2004) that explained rising personal saving in China within the life-cycle hypothesis. We prove that their explanation is insufficient. Then, using panel data and exploiting differences among provinces and between urban and rural households, we show that there is a significant dissimilarity in savings decisions in urban and rural areas and that motives other than those envisaged in the life-cycle model might play a major role, above all precautionary savings and liquidity constraints. Our results suggest that to reduce the propensity to save of Chinese households it is necessary to improve the provision of social services and to facilitate access to credit.

Suggested Citation

  • Riccardo Cristadoro & Daniela Marconi, 2011. "Households' savings in China," Temi di discussione (Economic working papers) 838, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_838_11
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    References listed on IDEAS

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    1. Understanding Chinese household savings
      by Economic Logician in Economic Logic on 2012-02-16 20:53:00

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    Cited by:

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    2. Zhang, Shangfeng & Liu, Yaoxin & Huang, Duen-Huang, 2021. "Understanding the mystery of continued rapid economic growth," Journal of Business Research, Elsevier, vol. 124(C), pages 529-537.
    3. Fang Su & Bingjie Fan & Nini Song & Xue Dong & Yanxia Wang & Jingzhong Li & Bing Xue & Xianrong Qiao, 2021. "Survey on Public Psychological Intervention Demand and Influence Factors Analysis," IJERPH, MDPI, vol. 18(9), pages 1-16, April.
    4. Daniela Marconi & Lorenzo Bencivelli & Anna Marra & Alessandro Schiavone & Raffaele Tartaglia-Polcini, 2016. "Offshore RMB markets in Europe: prospects for greater financial integration between Europe and China," Questioni di Economia e Finanza (Occasional Papers) 334, Bank of Italy, Economic Research and International Relations Area.
    5. Sarah Chan, 2019. "China’s Narrowing Current Account Surplus: Evolving Trends and Policy Implications," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 345-359, September.
    6. Marina Malkina, 2019. "Determinants of Private Savings in the Form of Bank Deposits: A Case Study on Regions of the Russian Federation," Economies, MDPI, vol. 7(2), pages 1-22, June.
    7. Song, Zhongchen & Coupé, Tom & Reed, W. Robert, 2021. "Estimating the effect of the one-child policy on Chinese household savings - Evidence from an Oaxaca decomposition," China Economic Review, Elsevier, vol. 66(C).
    8. Enrica Di Stefano & Daniela Marconi, 2015. "Assessing potential growth in emerging countries after the global financial crisis," Questioni di Economia e Finanza (Occasional Papers) 256, Bank of Italy, Economic Research and International Relations Area.
    9. Isha Chawla & Joseph Svec, 2023. "Household savings and present bias among Chinese couples: A household bargaining approach," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 648-672, January.
    10. Springer, Cecilia & Evans, Sam & Lin, Jiang & Roland-Holst, David, 2019. "Low carbon growth in China: The role of emissions trading in a transitioning economy," Applied Energy, Elsevier, vol. 235(C), pages 1118-1125.
    11. Guangdong Li & Chuanglin Fang, 2018. "Spatial Econometric Analysis of Urban and County-level Economic Growth Convergence in China," International Regional Science Review, , vol. 41(4), pages 410-447, July.

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    More about this item

    Keywords

    China; saving rate; precautionary savings;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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