An intriguing column from Prof. Robert Shiller of Yale University (famous for his book Irrational Exuberance which correctly predicted the dot-com bust): The saving rate in China is the highest of any major country. China’s gross saving rate (the percentage of GDP that is not consumed immediately), which includes both public and private saving, is around 50%. By contrast, the saving rate in the United States is the lowest of any major country – roughly 10% of GDP. ...the uptrend in saving in China began at around the same time as its one-child policy was implemented in 1979.... economist Franco Modigliani...argued that this demographic change explains much of the increase in the saving rate, as Chinese substituted investment in capital for investment in children. Now to me this is only partly convincing. No doubt it explains part of the reason the Chinese have saved so much, but there must be other reasons as well (e.g. the real rate of return on investing is high in this fast growi...
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