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Nobel Laureate: China Needs to Improve Social Welfare to Lower High Savings

China should improve social welfare to lower its high savings, a strategy to base the already export-fueled economy more on domestic consumption, Nobel economics laureate Joseph E. Stiglitz said Saturday.


Although China's high saving is envied by the rest of the world, it is "too much to be good," Stiglitz said in Guiyang, capital of southwest China's Guizhou Province.


High saving means China is dependent on export to keep its economy growing, he said, adding that "one of the reasons that people save so much is that they are worried about their future."


In recent years, Chinese residents' savings ratio lingers above 40 percent, higher than the average savings ratio of 20 percent in developed countries. Meanwhile, China recorded a sizzling economic growth of 10.7 percent in 2006, largely powered by strong exports, which rose 27 percent to US$969.1 billion.


Stiglitz said to increase consumption and reduce saving, China should improve its retirement program, health and education.


He also said that China needs to tackle the widening gap between the rich and the poor to ensure "the sustainable increasing of the GDP."


Having served as the economic adviser during the Clinton administration and chief economist and senior vice president of the World Bank, Stiglitz is now a professor at Columbia University in New York and chair of Columbia University's Committee on Global Thought.


(Xinhua News Agency March 11, 2007)

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