Relationship Between the Savings Rate and Economic Growth of China

1988 Words May 30th, 2013 8 Pages
Relationship between the Savings Rate and Economic Growth of China
By: Muhammad Saddam Hossain

Institute of Business Administration,
Jahangirnagar University

Submitted to:
Dr. Shuddhasattwa Rafiq
Associate Professor, Institute of Business Administration, Jahangirnagar University

Submitted by:
Muhammad Saddam Hossain
Batch: 21st Class ID: 1565

Date of Submission: June 11, 2013

Institute of Business Administration,
Jahangirnagar University

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Table of Contents:
Contents 1. Introduction 2. Savings Rate 3. China’s High Savings Rates 4. How to calculate Savings Rate a. Private saving b. Public saving c. National Saving d. Savings Rate 5. China’s Comparative Savings Rate 6. Relationship between the saving rate and
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A low or negative savings rate usually indicates excessive borrowing, spending, or both. On the other hand, a high savings rate may result in slower economic growth as persons and companies are saving instead of purchasing goods and services. In the United States, savings put aside by individual states to pay for services when revenues fall below expenditures. That is, when the state is required to spend money in excess of its tax and other revenue, it may use the rainy day fund to make up the difference. States put a certain percentage of their budget surpluses into their rainy day funds. Rainy day funds are especially important for states that have balanced budget amendments in place. Here I will discuss about the saving rate of Peoples’ Republic of China, its rapid growing saving rate, comparing with other countries.

China’s High Savings Rates:
Since the early 1980s China has witnessed a rapid increase in its national savings rate to one of the highest rates in the world. Unlike the socialist period when consumption was repressed in order to redirect resources to investment, most of these savings are voluntary. Following the sharp increase in income that followed Deng Xiaoping’s economic reforms, household savings rates in China began to rise rapidly. They have continued to rise to the point that the national savings rate in China is now the highest in the world. That savings would grow in a country emerging from poverty is not necessarily surprising, but

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