Cesar Valencia

Why Do Chinese Save?

Michael,
Very nice article, but I believe you've read too much into the situation. The real reason Chinese people save that much money is because they want to be insured. This is not only true of the Chinese, but true about the emerging wealthy population from developing countries. People will want a safety net in case of sickness, in case they want to send their kids to study abroad, in case they want to buy a home or in case they want to retire. Since in many parts of the world low inflation, low interest rates, a functioning public health sector, free good public education system, and social security are either non existent or inefficient, individuals will protect themselves by saving.
This is a basic financial decision, they postpone consumption in the present to guarantee the satisfaction of their needs in the future. I know this because I have the same background. The only reason I could come to get my postgraduate degree in the states was because my parents saved enough.