China’s domestic saving as % of GDP
Households make the
biggest contribution, Urban households headed by 25 year olds save almost 30%
of their disposable income, as do those headed by 60year olds. This pattern is
quite different from that in most countries, Where the young borrow against
future income and the elderly run down the savings they accumulated in their
high earning middle years. One reason why the
Chinese save is because they have to pay for things such as education and
health care which in other countries are provided by the state. It’s not
saving; it’s self taxation, says Paul French of Access Asia, a consumer
research firm in Shanghai. The government has promised to spend 850 billion
yuan ($125 billion) in 2009 to widen health insurance coverage and improve
public clinics and hospitals. It is also reforming the
pension system which now leaves out
over half of urban workers and 90% of
their rural counterparts. Another reason why the
Chinese save is because they find it hard to borrow. Only a small proportion
(11% of younger households) has a mortgage, and those that do scrimp and save
to try to pay it pay it off in 5 years
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