The Studies On Cause And Countermeasure Of China’s High Savings Rate

From1990s till now with the rapid development of china’s economy, the national savings rate progresses step by step. In1992, the rate was36%, but it created a new record of52.6%in2010. In the latest three years it kept around52%. The high national savings rate has attracted some economists’attention such as Paul Krugman who is the winner of The Nobel Economics Prize. And the former present Bush, former finance minister Paulson have connected China’s high national savings rate with global economic balance. Though high national savings rate is the guarantee of the rapid development of economy, it also causes many problems.The main reasons of excessively high rate are insufficient domestic demand, long-term dependence on fixed investment and the improper economic structure of export..Lowing the high rate is the key to having a healthy economy.National savings contains household savings, corporate savings and government savings. After the transformation of economy, the increase of disposal income, the extreme unbalance of income system and the unsound social security system cause the high household savings, but there are still other reasons leading to high rate, such as the undeveloped financial system, the lack of diversification, changing population and different cultures. Enterprise is the main source of savings in China. China’s unique system and state-owned enterprise profit distribution system cause that many ordinary people cannot benefit the huge profit, so enterprise retained earning keeps increasing. However, the hole of governmental structure and the irresponsible action of small shareholders place a premium on widely immoral spirit. As a result, business owners tend to retained profits or transfer of funds for the expansion of the scale of investment. Government revenue growth rate significantly faster than national income, government consumption growth is slower than the government income growth and government spending to over-investment tilting those three reasons led to the government’s high savings.Compared with other countries, though our country household savings rate is high, it changes just a little in recent years. Corporate savings and government savings are the main reasons that push the savings rate increase rapidly. Government-led investment and tilted to enlarge state-owned enterprises in the economic growth pattern, compressing the consumer space, these results make the government savings and corporate savings show rapidly growth.According to international experience, government-oriented investment growth model and the export-oriented economy supported by the government are not sustainable in long-term development. With the advance of reform and open, more negative effects are gradually expanding. To solve the high household savings, the market-oriented reform should be adhered to, the transformation of the pattern of economic development should be accelerated, the economic structure should be adjusted, and the household income should be increased, at the same time, reforming the income distribution system, perfecting the social security system, weakening residents’precautionary saving motive and consumption potential of development of the society as a whole. While the improvement of consumption and investment environment can expand the scale of consumption, enlarge the channels of conversion from saving to investment, improve the efficiency of transformation. To dissolve the high enterprise savings, the enterprise environment and internal management should be strengthened, profit distribution system should be reformed, the dividend proportion in state-owned enterprises should be improved, and private enterprise dividend should be encouraged. To dissolve the government high savings, first of all, the government should transform their functions, work for public investment, focus on public finances and implement appropriate fiscal policy and monetary policy, raise capital output’s strategic position.