Caixin
Jan 31, 2019 06:43 PM
OPINION

Zhang Jun: Why China Must Save Less

China’s high-saving, high-investment growth model of recent decades has run its course. Photo: VCG
China’s high-saving, high-investment growth model of recent decades has run its course. Photo: VCG

In his influential 1954 article “Economic Development with Unlimited Supplies of Labour,” the future Nobel laureate economist Arthur Lewis concluded that “the central problem in the theory of economic development is to understand the process by which a community which was previously saving and investing 4 or 5% of its national income or less, converts itself into an economy where voluntary saving is running at about 12 or 15% of its national income or more.” That process, Lewis argued, “is the central problem because the central fact of economic development is rapid capital accumulation (including knowledge and skills with capital).”

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