chapter  3
Empirical analysis of the influence of China’s national debts on total social demand
ByGao Peiyong
Pages 10

This chapter addresses the national debts' effects on households, enterprises, governments, residents' consumption, enterprise investment, fiscal expenditure and total social demand. The control of social purchasing power has been treated by China's economic theorists as one of the roles of borrowing national debts. The interest rate on China's national debts is currently contingent on the bank savings rate, that is the administrative interest rate. The successive issuance of national debts since the economic system reform in 1978 has caused two significant changes: The increase in households' and enterprises' disposable incomes and the rising interest rate including the interest rates of bank savings and loans. Fiscal authority required control of the fund-raising interest rate because the fund-raising activities at a higher interest rate through enterprise bonds, investment bonds and various funds had a serious impact on the issuance of national debts.