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Economists defend China's high savings rate
(Xinhua)
Updated: 2009-01-07 18:39 In addition, the balance sheets of the financial sector, companies and the government were all in good shape. "The fundamentals of the Chinese economy and its financial sector are good," he said. Ding Zhijie, deputy dean of the University of International Business and Economics finance school, said high savings were a major weapon helping China weather the impact of the global financial crisis. A high savings rate, along with cheap labor and a huge domestic market, had enabled China and its financial sector to better deal with the crisis, he said. It also served as an indicator of insufficient domestic demand. Ding's viewpoint echoed a November report by Bank of America Corp, which said Asian financial markets led by China and India were likely to better cope with the financial crisis as higher savings would help borrowers to weather the global economic slump. Fan Gang, a Beijing-based economist and member of the central bank's monetary policy committee, attributed China's high savings rates to factors that handicapped the growth of domestic consumption -- the absence of a sound social security system, including retirement program, health and education. Another factor was that the annual incomes of many Chinese were still low, said Fan. Chinese farmers were now more willing to spend so the government had launched the "sending household appliances to countryside" drive to help stimulate the economy. Two months ago, the government offered a 13-percent subsidy to farmers buying designated brands of household appliances, such as TVs, refrigerators, mobile phones and washing machines. Increasing cooperation Zhang from the CASS said it was not the time to apportion blame for the crisis. "We should sit down and seek cooperation to deal with the crisis jointly. The G20 meeting was a good beginning when everyone discussed how to reform the international monetary system," he said, referring to the November gathering in Washington attended by leaders from the world's 20 richest and emerging economies. Zhang said China had been responsible in fighting the financial crisis with cooperation with other nations and measures to boost domestic demand and maintain economic growth. The government had churned out a set of aggressive measures, including massive investment plans and encouraging more consumption, to stimulate the world's fourth largest economy. Tang Yaling said developed and developing countries should shoulder different responsibilities based on their positions on the world economic order. International cooperation was necessary to help shore up market confidence, she said, urging all countries to see beyond their own interests to the perspective of the world economy. Wu Jinglian, a leading economist with the Development Research Center under China's State Council, or the Cabinet, said China should not sell US treasuries, citing the old Chinese adage that when the nest is overturned, no egg stays unbroken. "In a globalized world, countries have a common stake in stabilizing the global economy. Therefore, I endorse the government stance, which calls for more cooperation with other economies," he said. The economic crisis would be a lesson to the US and the world that the pre-crisis development mode was unsustainable and cooperation among nations was essential to a healthier financial system, Wu said. (For more biz stories, please visit Industries)
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