China's Growth Model

The media doesn't really quite fully explain the way China's engine works, he says. The Gersh and Crohn model shows that developing countries tend to have very high investment needs but also low savings rates. Countries like Japan, Germany,. China, South Korea, the Netherlands, et cetera, all of these countries with very high savings rates retains a relatively low share of GDP. In the case of China, the lowest share in history. And so if people retain a very low share of what they produce, not surprisingly, they consume a very lowshare of what they produced - everything else is savings.

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