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1
Sustaining China’s Economic Growth After
the Global Financial Crisis
National Committee on US-China Relations
New York
February 27, 2012
Nicholas R. Lardy
Anthony M. Solomon Senior Fellow
Peterson Institute for International Economics
Nicholas R. Lardy
2
Investment Share of GDP,
1997-2010
Percent of GDP
50
48
46
44.1
44
42
40
38
37.1
36
34
32
30
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Nicholas R. Lardy
3
Consumption Share of GDP,
1997-2010
44.9
36.6
Nicholas R. Lardy
4
Real Return on Household One-year
Deposits, 1997-2011
Percent
8
6
4
3.04
2
0
-.54
-2
-4
-6
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Nicholas R. Lardy
5
Household Saving from Disposable Income,
1997-2008
Percent
45
40
36.4
35
29.4
30
25
20
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Nicholas R. Lardy
6
Investment in Residential Housing,
1997-2011
Nicholas R. Lardy
7
Peak Investment in Residential Housing:
China, United States, India, and Taiwan
% GDP
10
9
8
7
6
5
4
3
2
1
0
China (2011)
United States (2005)
India (2008)
Taiwan (1980)
Nicholas R. Lardy
8
Composition of Urban Household Wealth,
1997 and 2010
Percent GDP
100
90
80
70
Equity
60
Bonds
Urban Housing Stock
50
Insurance Policy
Bank Deposits
40
30
20
10
0
1997
2010
Nicholas R. Lardy
9
Household Debt and Mortgage Debt as a
Percent of Disposable Income, 2003-2011
Percent
60%
50%
40%
HH Debt as %
Disposable
Income
30%
20%
Mortgage
Loans as %
Disposable
Income
10%
0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
Nicholas R. Lardy
10
Bank Exposure to Real Estate, 2004-2011
Percent of Loan Book
Percent Bank Capital
Nicholas R. Lardy
11
Current Account, 1997-2010
Percent of GDP
12
10
8
6.8
6
4
2.4
2
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Nicholas R. Lardy
12
Additions to Foreign Exchange Reserves,
1997-2011
Percent of GDP
16%
14%
12%
10%
9.1
8%
6%
4%
3.5
2%
0%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Nicholas R. Lardy
13
Sterilization Liabilities, 1997-2011
Percent of GDP
Nicholas R. Lardy
14
The Winners and Losers from
Financial Repression
Winners:
Losers:
• Coastal Provinces
• Inland Provinces
• Exporters and Import
Competing Industries
• Importers and Consumers
• Commercial Banks
• Savers
• Property Developers and
Local Governments
• First-time Homebuyers
• Ministry of Commerce and
Ministry of Finance
• Peoples Bank of China
Nicholas R. Lardy