China's personal savings rose to a record 14 trillion yuan
(US$1.7 trillion) at the end of last year, mainly because people
put aside more money to pay for education, health care and housing,
analysts said yesterday.
The People's Bank of China (PBOC), the central bank,
said on Sunday that savings reached 14.1 trillion yuan (US$1.74
trillion), or more than 10,000 yuan (US$1,200) per capita.
The figure was 12.6 trillion yuan (US$1.56 trillion) for
2004.
Yet, even as people get richer, they have become more cautious
in their spending.
"People are forced to save for future expenditure," said Peng
Longyun, a senior economist with the Asian Development Bank's
Resident Mission in China.
According to an earlier report by the Chinese Academy of Social
Sciences, education, housing and medical costs have become the
"three mountains" weighing on the shoulders of the Chinese
people.
In addition, culture and tradition are also factors behind the
high savings rate.
"Compared to Americans, Chinese people are more inclined to save
their money in banks rather than spend it," said Qi Jingmei, a
senior economist with the State Information Centre.
The lack of sophisticated wealth-management services and
products also contributes to high savings.
"Wealth management in China is still in its infancy. Although
people want to invest, they don't have many channels." Qi said.
She added that services provided by banks for common people are
particularly limited, leaving them with no option but to save.
Public consumption contributed only 37.8 percent to China's
gross domestic product in 2004, compared to 60 percent in the
United States.
Critics have noted that China's economy relies too much on
investment, which accounts for 48.1 percent of its GDP.
The government has already announced tax policies to redress the
balance between investment and consumption, such as raising the
threshold for personal income tax.
Yet the country is unlikely to see a big surge in consumer
spending in the next few years, said Qi.
"Spending is individual behavior. I am afraid the high saving
rate will last for 10 years," she said.
In the past decade, Chinese spent only 60 percent of their
income, compared to nearly 80 percent worldwide, according to the
National Bureau of Statistics.
(China Daily January 17, 2006)