As Lardy recognizes (along with many Chinese economists) the minimum pension is modest and could be increased further, the system of unemployment insurance remains thin and fragmented along provincial lines, and out of pocket health care costs are high 2/

Second, China has expanded its social spending primarily by increasing relatively regressive taxes -- and the structure of the payments into the system of social contributions is (per the IMF among others) very regressive 3/

That has limited its impact on national savings -- the hefty tax on low income working households in the formal economy reduces their purchasing power 4/

Third, I at least have also advocated increasing China's personal income tax (which collects very little -- ~ 1 pp of GDP) and funding the social insurance system more progressively. Taxing high propensity to save households to fund benefits for high propensity to consume

Finally, I at least (unlike the IMF ...) have never insisted that the increase in funding for social spending be budget neutral. In fact, to drive rebalancing, I have often suggested that it be financed by a bigger central government fiscal deficit 6/

And the main channel through which such a shift impacts national savings is through more government dissavings, not through any change in household behavior (tho of course a fall in household savings would be welcome) 7/

The change how China taxes (more taxes more progressive) and how it spends (more on household income support, less on subsidies for new factories in "involuted" sectors) agenda was always a rather hopeful agenda -- 8/

If that positive agenda won't in fact reduce household savings/ raise household consumption help address China's demand deficit, my challenge to Nick and Andrew is to identify an agenda that will ... 9/

Otherise, a China that needs 1.5 pp of growth from net exports is on a collision course with the rest of the global economy ... 10/

One last suggestion: The IMF produced a series of useful papers on these issues in the late teens -- it would be useful to update them as part of the Fund's new focus on imbalances (the IMF's effort to be a fiscal policeman for China proved to be a dead end imo) 11/11

so there is still a chance that a fiscal deficit run to expand social expenditure could be a two-fer (traditional macro channels + change in household incentives to save :) ...) tho you put low odds on the second channel. fair enough ...