An Empirical Analysis Of The Reason Of China’s High Savings Rate

The high savings rate is an important factor that restrains China’s domestic demand and induces quantitative expansion of economy. The academia has studied the changing mechanism of it for a long time; however there is no agreement as to the relationship between the population composition and the savings rate. In addition, the existing researches also have defects in explaining the way in which the population age structure affects the savings rate-they are not detailed and comprehensive enough. In view of this, this paper studies the impacts of the age composition of population on China’s national savings rate comprehensively, and come up with some suggestions of the policies and measures.Firstly, this article makes a summary of the mechanism through which the population age structure affects the savings rate, and points out there are two kinds of mechanisms, through which the population age structure affects the savings rate:micro mechanism and macro mechanism. On the basis of the measurement model built on the life cycle theory, this paper uses a variety of estimation methods to estimate static and dynamic panel model, by using the provincial panel data from1989to2011. In addition, the length of selected time can affect the dispersion degree of the variables in a certain extent, such as savings rate and dependency ratio. This may affect the research conclusion. Therefore, in order to examine the robustness of the conclusions and the time trends of the effect of dependency ratio and economic growth rate on national savings rate, this paper divides the sample data into two periods,1989-1998and1999-2011, to make regression estimate separately. According to the results, the decline of the young dependency ratio is an important reason for the rise of national savings rate, however, in the long term, the influence of the young dependency ratio on national savings rate, to some extent, has been weakened; The rise of the old dependency ratio is another important reason which causes the rise of the national savings rate, and this point can be proved in various estimates; Residents have strong saving habits, which is an important factor leading to China’s high savings rate for long time. The result of regression estimate in the time periods proves that the correlations between the young dependency ratio and national savings rate are significant negative, and the correlations between the old dependency ratio and national savings rate are significant positive, which are consistent with the overall regression. However, the fall of the young dependency ratio by1%will cause more rise of national savings rate between1999and2011; the effects of old dependency ratio on the savings rate weakens to a certain extent after1999, these changes are highly correlated with the reforms beginning in the late1990s, such as the higher education reform. Combining the effect mechanism discussed in the existing researches with China’s special national conditions, this paper make comprehensive and detailed analysis. Based on the research conclusion, and combining with the prediction of trend of China’s future population age structure, this paper puts forward some suggestions to reduce the savings rate.