China's Savers

Anxiety Drives Chinese Fixation on Frugality: Financial insecurity and long-term goals compel many in the growing middle class to save. That enables Americans to overspend. By Don Lee

Chinese families are saving about half of their income. Analysts believe that has contributed to a "global savings glut" that has helped push down interest rates and, in the U.S., fuel excessive spending. U.S. households have been spending more than they have been earning in recent months. That contrasts with an average savings rate — or savings as a percentage of income — of 8% from 1950 to 2000.

For China, high savings have pumped up investment at home and supported export industries. But the country's widening trade surplus has triggered complaints from the United States. In a visit to Beijing last month, Treasury Secretary John W. Snow suggested that the Chinese save less and spend more — on U.S.-made goods to help ease America's big account deficit.

But most experts expect China's savings rate to stay high for years to come because of the need to prepare for a large dependent elderly population. The median age of China's population has jumped to 32.6 from 22.1 in 1980, says Andy Xie, an economist at Morgan Stanley in Hong Kong, mainly because of the nation's one-child policy.

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China, like other nations in East Asia, has a long tradition of thrift. Analysts say it may be linked to Confucian values that encourage thrift and production rather than consumption. China's propensity to save also reflects its agrarian society, where people face more risks of fluctuating incomes and their long work hours leave them with little leisure time to consume.

See also Traditions of Saving and Consuming in China by Anthony Kuhn, where he quotes someone saying that Chinese banks allocate funds poorly. See also this on Personal Savings.