Contributed by: Jiang Meng
Translated by: ling limin
Ma Jiantang, the head of the National Bureau of Statistics, revealed in the Global Think Tank Summit that in 2008 China’s savings rate was 51.3%. That year, the rate of U.S. was 12%. Ma Jiantang said that China’s high savings rate was closely related to its traditional culture backgrounds in East Asia “approving frugality while opposing luxury”. The other reason caused high savings rate was that many Chinese were pessimistic and cautious about future economy. Chinese version >>
It seems for a long time that Chinese people has been regarded as traditionally frugal. In the financial crisis, the over-consumption Yankees even in turn put the blame on the Chinese did not like to spend money. But is this really the case?
It was said that “20 percents of china’s rich people control 80% of the social wealth”, which doubt the previous concept of Chinese love saving their money: The upper classes, especially millionaires, have too much money to spend in daily life but less investment channels in markets. The middle class, having achieved two important items: house and car, can no longer spend their money as they wish because of heavy loan burden. The lower-classes, with little savings in hands, mainly consisted of migrant workers and urban grassroots, have been in fears of some unpredicted worries such as children’s education, expensive medical budget, unemployment, etc.
In fact, the rich have no need to “stimulate economy” because they have already identified themselves by possessing real estate, luxurious cars and even private airplanes. The structure of economy in China is like a pyramid rather than an olive, which limits the number of middle classes - the right ones who contribute most to Chinese economy. However, it is the bottom of the pyramid- the low-income people, who buy the largest portions of necessities such as refrigerators, TVs, computers and mobile phones rather than luxury goods.
In other words, the main problem now is the gap between the rich and the poor. Before opening-up policy, there was little difference of people’s incomes. Thanks to decades of fast development in China, our annual fiscal income has been rising continuously. At this point, the masses hope to enjoy a better social security system so that all can share the results of the reform while narrowing the gap between the rich and the poor.
Although our state’s financial ability strides forward, It is still a long way to achieve the aim of supporting 1.3billion people “from cradle to grave”. The upper classes sometimes are lack of their responsibility for second allocation of tax revenue and they also monopolize markets to secure the largest benefits. Premier Wen Jiabao said that "confidence is more important than gold”. If the middle and lower class workers are confident about future social security insurance, they will not be reluctant to spend money. Unfortunately, most investment focus on infrastructure projects, aimingfor short-term GDP.
Astronomical number of deposit in banks does not mean Chinese people tend to be “miser”. As a matter of fact, Chinese people are willing to spend money but they share little to spare on average by such a large popularity in China. In other words, each one only shares a small portion of wealth. Should Chinese people spend money in the loaning way like Americans, our credits would be endangered as the bubble blowing in the United States.
