The figure, which might look auspicious for Chinese who superstitiously love the figure 8, does not mean much in itself. Savings have swelled in line with economic growth and therefore reaching 8 trillion yuan (US$960 million) is not the major milestone it appears.

But it is the recovery of the savings' growth rate that will catch the eye of economic observers and officials.

Strong traditions of putting money away have ensured the savings rate in China stays at a high level. But a look at a line chart of the year-on-year growth rates for savings will show the speed is getting slower. This has been continuous from 1994 until 2000, when they climbed by a mere 7.9 per cent.

Growth picked up again in 2001 and this momentum was reinforced during the first sixth months of this year, when the rate rose to 17.4 per cent.

This phenomenon is partly explained by a weakening of the appeal of houses, cars, computers, stocks and travel trips. Instead people are more security conscious and are putting aside money for future expenditure and in case of uncertainty.

Sixty percent of the new savings during the first six months were time deposits, which means people increasingly do not wish to make immediate purchases.

It is impossible to deduce the right rate at which the savings should be growing, but policy markers should be on their guard when consumers are showing less interest in spending.

We are in the fifth year of a so-called "proactive fiscal" policy, which features massive government spending. When the policy was initiated four years ago, it was hoped that government spending be reduced after the economy warmed out and consumers would pick up the gauntlet of expenditure instead.

So people's unwillingness to spend is creating new difficulties for policy markers.

But mounting savings are good news for banks. It seems savers still trust the banks in spite of rumors about their technical solvency.

(China Daily August 5, 2002)