Increase in savings will of the United States restricting China's economic growth

Increase in savings will of the United States restricting China's economic growth

American families to increase savings on what impact the Chinese? To simplify, we assume that the world's only two types of countries, a class of high-consumption, the trade deficit country, the representative of the United States; the other is a high savings, trade surplus with the country, the representative of China. Although there are still other countries, but the United States and China are two different model. Between the United States and China's economic imbalances, from a large extent, Europe, Japan, Britain and other large economies to allow the existence of such an imbalance is more prominent. The current round of economic crisis began in 2007-2008, in the previous 10 years, the U.S. economy has made rapid development, and promote the development, it is the United States surging consumer boom. As we all know, the United States more than GDP growth rate of consumption growth, is bound to give rise to two consequences, first, on behalf of the U.S. savings rate has dropped, and the other is the size of the U.S. trade deficit widening. It can be inferred that the reason the U.S. trade deficit expanded, the fundamental reason is that the savings rate continued to drop. However, there is a balance in everything. If consumption growth in the U.S. than the production growth (here I ignore the changes in the factors of investment), then to China, the production must be more than the consumer. In other words, on the one hand, the U.S. savings rate has pushed up the trade deficit, on the other hand, the rise in savings rate in China to promote the trade surplus. This is exactly the fact. Please note that I did not wrongly identified as a result of both, respectively for the fruit. After the outbreak of the global economic crisis, we find that the U.S. household sector's savings rate began to rise sharply, in part because U.S. government debt in the short term increase, but overall, the United States to raise the savings rate is an indisputable fact. With the savings increase in the rate of decline in U.S. consumption must. At the same time the United States if the GDP is declining, then the final result can only be a sudden contraction of consumption. This situation is what does China mean? It is clear that the U.S. trade deficit is rapidly shrinking, then it should be China's trade surplus should narrow the equally fast. But in fact, China's trade surplus has been expanding. This reality, and I have on the world, only China and the United States assumed that the two countries there have been inconsistent. Since the country's trade surplus with the world's trade surplus is shrinking, then China's trade surplus continues to expand, only a possibility, it is China's trade surplus with countries other than the contraction of global trade surplus more than the total rate of contraction. I think how long this situation can not be sustained, China's trade surplus will narrow the final. Perhaps, in fact, has begun shrinking. It is also the key below. As long as the United States over the production of consumption, then China's GDP growth will be China's own consumption constraints. In other words, China's GDP growth rate must be faster than the consumption growth rate, which means that China's savings rate must rise. In fact, the assumption that China's GDP growth rate of 11-13%, while China's annual consumption growth rate will be close to 9%. In other words, it is precisely because of the substantial debt the Americans, China's annual GDP growth rate will be higher than the consumption growth rate of 2-3 percentage points. The next would happen then? Now, the U.S. savings rate is rising, indicating that the growth rate of U.S. consumption will be lower than the GDP growth rate of the United States. If the United States slow GDP growth, consumption weak positive, and if the U.S. GDP decline, consumption will slump. In either situation, the United States will continue to shrink the trade deficit, unless the United States invested more than savings, and investment is almost zero possibility of increase. As a result of a balance of international payments, so that once the United States rose by more than GDP growth in consumption, then consumption growth in China more than China's GDP will certainly increase, resulting in an inevitable decline in China's savings. The reason why China's decline in savings can only be two reasons, either because the growth of consumption, either because the decline in GDP growth, no matter what, China is an inevitable decline in savings. It would appear that China's GDP growth will no longer be able to lead as before consumption growth, but the growth rate of consumption in turn, by the constraints, that is, GDP growth in China's consumption growth will lag behind, unless the rapid expansion of the scale of investment. Of course, the Chinese government policy of fiscal stimulus to promote investment, but also resulted in the growth of government debt, as well as damage to the profitability of the business. I personally think that the effect of fiscal stimulus is sustained up to 2012, there may even be shorter. This is the future of China's economic growth in terms of what it means? The past, China's annual economic growth rate of 11-13%, the annual consumption growth rate is about 9% in the. And when the United States stop the decline in savings rate and a rapid rebound could lead to China's GDP growth rate lagged behind the growth rate of 1-2 percentage points of consumption. The assumption that China's annual consumption growth rate of 9%, then China's GDP growth rate will be 7 percent to 8%. Judging from the above analysis, if 11-13% of the GDP growth rate of 9% associated with the consumption growth rate, then whether to keep the 7-8% GDP growth rate of 9% while maintaining the growth rate of consumption? I am skeptical attitude. I think that China's consumption growth will also be a result of the slowdown in GDP growth slow down. This shows that the rise in savings rate as the United States a series of adjustments, the annual growth rate of China's economy will be far less than 7-8%, there may be only 5-6% or even lower. China and the United States depends on the degree of fiscal expansion, for China, the savings rate to prevent dragging of the hind legs GDP, while the U.S. trade deficit will shrink as much as possible so that a slow down. This is just my personal speculation, the conclusion to the findings of the above, I quoted part of 80-90 during the last century in Japan and the United States as an example. Of course, the situation will be different. But one thing is relatively certain: if the U.S. savings rate increased to promote the growth of its GDP more than consumption, China is likely to be bound by its GDP growth in consumption growth. From this point of view, I think that once the policy reasons for aggravating the credit bubble, China will face long-term economic slowdown. Securities Times 2009-6-29