Bailouts

The Yin and the Yang of Shadow Banking in China

By almost any measure, China saves more than virtually any country in the world. Over the past decade, gross national savings has amounted to about one-half of GDP.  And that phenomenal rate continues: only Qatar and Macau save more  (see chart). There are many good reasons to save. At the top of the list in China has been the high marginal return on capital that naturally accompanies rapid economic growth.

Despite this, households in China until recently have had few attractive avenues for saving....

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