The Chinese Corporate Savings Puzzle: A Firm-level Cross-country Perspective

Author/Editor:

Hui Tong ; Shang-Jin Wei ; Tamim Bayoumi

Publication Date:

December 1, 2010

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

China’s high corporate savings rate is commonly claimed to be a key driver for the country’s large current account surplus. The mainstream explanation for high corporate savings is a combination of windfall profits in state-owned firms, especially in resource sectors, and mis-governance of state-owned firms represented by their low dividend payout. The paper casts doubt on these views by comparing the savings of 1557 Chinese listed firms with those of 29330 listed firms from 51 other countries over 2002-07. First, Chinese firms do not have a significantly higher savings rate (as a share of total assets) than the global average because corporations in most countries have a high savings rate. The rising corporate savings rate is also consistent with a global trend. Second, there is no significant difference in the savings behavior and dividend patterns between Chinese majority state-owned and private listed firms, contrary to the received wisdom.

Series:

Working Paper No. 2010/275

Subject:

Corporate finance Corporate sector Currencies Current account Current account surpluses

Frequency:

Monthly

English

Publication Date:

December 1, 2010

ISBN/ISSN:

9781455210824/1018-5941

Stock No:

WPIEA2010275

Pages:

32

Please address any questions about this title to publications@imf.org