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March/April 2011, 
Vol. 93, No. 2
Posted 2011-03-01

Can Rising Housing Prices Explain China’s High Household Saving Rate?

by Xin Wang and Yi Wen

China’s average household saving rate is one of the highest in the world. One popular view attributes the high saving rate to fast-rising housing prices and other living costs in China. This article uses simple economic logic to show that rising housing prices and living costs per se cannot explain China’s persistently high household saving rate.