It is a well known fact that the Chinese like to put money in the bank. But recently, a record 10 trillion yuan (US$1.2 trillion) was put on deposit nearly the total value of China's state assets.

The figure in the past three years moved from 7 trillion yuan (US$846 billion) to 8 trillion yuan (US$967 billion) and finally to 9 trillion yuan (US$1.09 trillion).

Does this sharp rise in saving mean the Chinese are now richer than before? And who is saving all this money?

A recent survey shows that the average salary in many cities and industries in 2002 was on a downward trend.

He Dexu, a professor with the Chinese Academy of Social Science (CASS), said that to many people, because of the increase in bank saving, their actual incomes are obviously down though their salaries haven't changed.

This shows that the bank saving increases more than that of income. In 2002, the growth rate of domestic saving reached 18 percent, while the per capita personal disposable income rose only 10 percent.

Yi Xianrong, another professor from CASS, said that if foreign currency saving was deducted, the actual saving deposit would be at almost 8 trillion yuan (some US$967 billion), with per capita saving at 6,200 yuan (US$749). It's widely estimated that 20 percent of the population own 80 percent of the wealth. Thus, the average amount of saving deposits amongst the richest group has reached 25,000 yuan (US$3,020), while the remainder has an average amount of 1,550 yuan (US$187).

The survey also shows that 10 percent of the urban population, about 45 million, has an average yearly disposable income of 20,000 yuan (US$2416). Their Engel's coefficient has been lowered below 15 percent and reached the average level of developed countries. "These people own all kinds of durable products, including houses and cars, so their marginal consumption propensity is the lowest," said Lu Lei, a researcher from the People's Bank of China, the country's central bank.

The sharp rise of savings in this group is due to the adoption of real-name system for saving deposits in 2000 and the country's continuous campaign against tax evasion in 2002. Many bosses, who used to deposit their personal income in the name of enterprise revenue in order to avoid tax, now put their money into banks under their own name.

Statistics show that the middle group, about 450 million, have disposable income or net income of 6,000-7,000 yuan (US$725-846). "Having bought some basic products, they save money mainly for buying a house or a car in the future," said Lu Lei.

The rest of the population, the 700 million people in the low-income group, have an average yearly disposable income of less than 2,000 yuan (US$242). This group has high marginal consumption propensity, but their income increases slowly. Considering the huge expenditure in the medical sector and their children's education, they usually save as much as possible for keeping a basic living in the future.

Some of the saving deposit is from redundancy of laid-off workers, who dare not spend this life-supporting money because of their low expectation for future income. Yuan Gangming, director of the Macro-economy Research Institute under CASS, pointed out that in some sense, the increase of saving deposit means the widening of the gap between China's wealthy and poor.

(China.org.cn by Tang Fuchun, April 9, 2003)