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Heavy Chinese savers reluctant to spend
www.chinanews.cn 2006-01-16 14:30:44
Chinanews, Jan. 16 - The latest statistics from the Central Bank show
that up through December 2005, total private RMB savings have broken the
14 trillion (US$1.75 trillion) mark, creating another historic new high.
However, another set of economic statistics keeps falling year after year
- the consumption growth rate of the nation's citizens in the past five
years. In these ten years, China's final consumption has averaged 59.5%,
nearly 20 percentage points lower than global average. The increasingly
well-to-do Chinese has become more and more reluctant to spend money,
this seemingly contradictory economic phenomenon is worth fathoming.
Lack of consumption confidence has held up private spending. In the last
several years, China's structural reform has targeted longer and more
in-depth development and a series of important reform measures have been
introduced one after the other, in areas such as housing, education and
medicine. Although these reform measures will benefit economic
development in the long-term, but in the near-term, citizens still have
anticipatory awareness of the uncertainty of future income and cash
outflow, therefore lacking consumption desire, causing the average
consumer to worry about the uses of their incomes. Their anticipatory
alertness has obviously risen.
Housing, education and medicine have become insupportably burdensome.
Chinese Academy of Social Sciences published "2005 social bluebook".
Amongst this bluebook, children's education, retirement and housing are
the three main consumption expenditures; and the People's Bank's fourth
quarter of 2004's survey titled "Purpose of Savings" also shows that the
purposes of private savings, in order of importance, are education,
retirement income and household redecoration.
Those who wish to spend do not have enough money in their pockets.
Although private household savings have breached the 14 trillion RMB
mark, adjusting for China's 1.3 billion population, the average
disposable savings per capita has exceeded 10,000 RMB. On the other hand,
Gini coefficient of the disposable income of residents in small cities
and villages continue to rise, reaching the present 0.447 number,
obviously higher than the 0.4 warning frontline internationally. This
shows that the ceaseless rise of wealth is not distributed to all
citizens equally. Specialists point out that, affected by the weight of
population living in towns and villages and the big gaps in income,
China's savings account is not in equivalence with its national income.
The most numerous are the small and medium savings account holders. Not
only do they have less in cash, they also do not have much savings in the
bank. Those who are most in need of consumption have insufficient change
in their pockets.
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