Chinese National Income Distribution And The Impact On National Savings

Since the reforming and opening, China has made outstanding achievements. Its economy has continuously been growing quickly for decades; social wealth has been increased rapidly; comprehensive national strength has been enhanced greatly; and the living standards of the people have also been improving. However, in the recent years, the domestic effective demand, especially final consumption expenditure has always been sluggish, which can be reflected in the decreasing rate of final consumption and increasing national saving rate. In the situation of the global financial crisis, it has appeared to be inadequate to depend on investment and exportation to impetus economic growth in China. Lack of consumption demand has become the encumbrance to keep on the economy growth in our country. What's more, the final purpose of economic growth and development is consumption. So, expanding domestic demand and enhancing the effect of consumer demand will have a decisive role in China's economic recovery and future development.Firstly, the paper comments consumption theories in the western economics and reviews the latest development. Then, the paper summarizes researches on high savings in China.Secondly, the paper divides national savings into three sections:resident, corporation and government which shared the national income through the Procedure of first distribution and second distribution, and finds that high saving rate in corporation and government section is the main cause of high national saving rate. Based on this discovery, the paper analyzes the situation and incentive of savings in these three sections. Furthermore, the paper analyzes the relations of savings among the three sections.Thirdly, in order to support the conclusions, the paper uses panel data from 31 provinces between 1996 and 2008 to make empirical analysis.Finally, this paper, based on the above theoretical and empirical analysis, drew the main analysis conclusions and made related proposals. The analysis conclusions indicate that high propensity to save in resident section is caused by the characteristics of the population structure, decreasing share of compensation of laborers in first distribution, the strengthening uncertainty of people's income and expenditure anticipation caused by the economic system reform and the inadequate social security system of China. Increasing propensity to save and decreasing share of residents' disposal income in national income contribute to decreasing consumption rate which leads to increasing national saving rate in China.