GTAP Resources: Resource Display
| GTAP Resource #7707 |
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"Balancing China’s current account surplus: policy choices and impacts" by Gretton, Paul and Yixiao Zhou Abstract The gap between the high saving and relatively low investment in China has translated into a persistent current account surplus. Overall, China has two broad policy pathways to maintain its current account balance within international norms: lowering the saving rate by boosting domestic consumption, or absorbing saving through higher domestic investment by improving the attractiveness of investing in China—both requiring sustained policy actions. We examine the long-term economic implications of these policy options for the Chinese economy, using a six-region global macro model. We also conduct sensitivity analyses to examine, holding the saving rate given, what the impacts of rising desirability of investing in China have. We find that in such circumstances, sustaining relatively high investment rates require the drawing on foreign savings to make up the shortfall of domestics saving over domestic investment. Based on the findings, the longer-run perspective of this paper is more supportive of policies that bolster the structural resilience of the Chinese economy in the longer run over policies directed at temporary short term activity stimulus measures such as subsidies to current consumption. |
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- Domestic policy analysis - Economic development - Economic growth - Dynamic modeling - Asia (East) |
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Public Access  GTAP Resource 7707 (2.1 MB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/10/2026 2:17:55 PM
