The low savings rate in the United States and some European countries can be attributed to their fairly complete social security system, along with excessive optimism about their economic outlook and mistakes they made in policy formulation. The sovereign debt crisis in Europe was the result of economic structural faults such as overextended welfare programs, weak industrial competitiveness, and loose financial discipline. So it is unfair for low-saving countries to blame the crisis on the high savings rates of other countries rather than their own problems.
In fact, the United States and some European countries benefit from the high savings ratio of emerging countries. Due to their lack of domestic savings, Western countries are unable to meet their domestic investment needs. They cannot sustain their economies without support from outside money. Savings borrowed from emerging countries offset the shortage of savings in their own countries and support their sustained economic development. Even some American government officials and scholars acknowledge that American prosperity over the past decade would not have been possible without China.
Savings themselves are not the root of the problems in the United States and some European countries. The root of the problems lies in the fact that these countries did not use the borrowed money to shift their economic development mode, readjust economic structure, and improve industrial competitive edge. On the contrary, they used the borrowed money to maintain and intensify their original development pattern, continue to overconsume, and increase public expenditures, thus inflating asset bubbles. Rather than consider their missteps, these countries blame China for lending them money.
Western countries blame the global financial crisis on China's high savings rate in an effort to paper over their domestic problems, shuffle off responsibilities, ease tensions, and finally to restrain China's development. What is the fairest way to view the issue of savings?
Western countries are asking China to shoulder responsibility as a high-saving country. But China's actions have already shown it to be a responsible country. During both the Asian financial crisis and the more recent global financial crisis, China adopted responsible exchange rate policies, not implementing competitive devaluation. It maintained smooth and sustainable growth based on expanding domestic demand. In the face of problems in economic structure, China strengthened and improved macroeconomic regulation and sped up strategic readjustment.
As a result, the economic structure has constantly been optimized, and private consumption has grown significantly. In 2009, final consumption spending accounted for 53.1 percent of China's economic growth, compared with 35.8 percent in 2003, which made a significant contribution to promoting balanced growth in the global economy.
To pursue global common prosperity, it is necessary for major world economies to take a more objective view of the high savings issue and view it in terms of mutual benefit and win-win results. They should fully discuss the causes, impact and adjustments concerning this issue, so as to find common ground and reduce unnecessary conflict.
China needs to continue to promote reform and adjustment of the domestic economic structure, including improvement of social security, medical and health services, and housing and education systems. It should also raise residents' disposable income, strengthen the role of consumption in fueling economic development, speed up industrial restructuring, and upgrade technology. Meanwhile, China should establish multiple financial markets at different levels throughout the country, in an effort to distribute savings reasonably and use them effectively.
Leading countries should take real action to resolve their problems of unbalanced economic structure and shift their economic growth mode of relying on borrowed money, so as to promote sustainable economic growth.
They should also strengthen and improve financial supervision, strictly abide by international financial regulations, strengthen coordination through macroeconomic policies, and promote international cooperation and exchange. In doing so, they will be able to, together with all other countries, push the world economy to develop on a balanced and sustainable track.
(Translated by LI YUZHU)