Reduce savings ratio

While the international community is still digesting his proposal for a super-sovereign reserve currency to reshape the world monetary order, Zhou Xiaochuan, China's central bank governor, has also offered some insight on the country's high savings rate.

The implication of a new global currency to replace the currently dominant US dollar will surely draw much attention, but Mr Zhou's analysis on the causes of China's high savings may deserve more hearing, especially from domestic policymakers.

China's savings rate increased from 37.5 percent in 1998 to 49.9 percent in 2007. As a result, the domestic savings climbed while its current account surplus and foreign exchange reserves rocketed.