The Relationship Between Saving And Investment In China

Capital formation and capital accumulation are very important to the economic development. Capital accumulation depends on the saving rate and the transformation efficiency from saving to investment of the country. Our country is on the stage of industrialization, we need a lot of investment to develop our economy. It is necessary to research the correlation between saving and investment and find out the problems between them.According to the theory of neo-classicalism, the saving should be identical to the investment. However, they are not equal in the real world. The interest, tax, cost of trade and others factors affect the balance of the deposits and the investment of one country. This text analyzes the correlation between saving and investment of our country, the result shows the coefficient of our country is lower than other countries, especially the OECD countries. The main part of the text is trying to explain the result, and putting forward some related solution.The text defines the concept of saving and investment and introduces the factors which will affect them. Using the method of time series analysis, the author takes a positive analysis using the data of saving and investment of 1980-2008, and makes a conclusion of long-term and related coefficient between them. After this, this text also analyzes the dynamic relations of them.The rest part of the text explains the result of the analysis. There are three reasons for the low coefficient, the international capital mobility, the high saving rate and the low efficiency of transformation. And the text also raises some relative policies. First, reduce the gap between the rich and the poor, improve the social security system and use other policies to reduce the saving rate and raise the consumption rate. Second, develop the private banks and capital market to increase the transformation efficient.