The Chinese Current Account Imbalances
The subtitle of the paper is Puzzles, Patterns, and Possible Causes. Here is the abstract:
China’s large current account surplus has been an irritant to its trading partners. While industrial and trade policies often lead to sector-level imbalances, they play a relatively limited role in the economy-wide surplus. Structural factors such as an unbalanced sex ratio and uneven access to financing by state-owned and non-state firms are more important determinants of the current account imbalance. While macroeconomic stimulus can boost imports and reduce the surplus in the short run, any long-term solution would need to involve reforms aiming at addressing the structural problems.
By . I think not everyone will be persuaded, but the paper has numerous points of interest, including on the quality of the data. On the gender imbalance, the authors write this:
As the marriage market becomes increasingly competitive for young men, parents with a son raise their savings to improve their son’s relative standing in the relative market. At the same time, parents with a daughters face conflicting incentives on savings. On the one hand, they can reduce their savings to take advantage of the increased probability of marriage of their daughters. On the other hand, they may wish to raise their savings to preserve their daughters’ bargaining power within marriage…In the data, Wei and Zhang find strong evidence that a combination of having a son at home and living in a region with a skewed sex ratio greatly pushes up the household savings rate.
And on state-owned firms:
Since the banking system favors state-owned firms, many non-state-owned but highproductivity firms have difficulty with access to finance and therefore save for their own investment. This leads to a higher level of corporate savings.
Those points make sense to me, but perhaps industrial policy matters too because so many Chinese laborers have been underemployed, due to their (earlier) rural locations, thus limiting the applicability of Lerner Symmetry?