Nest Eggs and Economic Expansion in China

Chinese among top savers, but still dissatisfied

The Chinese population is among the best in the world at saving for the future, and a high level of savings has accompanied China's economic expansion. The Gallup Poll of China provides a look at the changing level of household savings in China over the last decade and motives for saving in China, as well as how satisfied Chinese are with their level of savings.

While the poll shows the average household income has grown by 147% over the last decade, the increase in the total amount saved by the average household over the same period was 67%. The increase in total savings has been driven almost entirely by urban Chinese, with total savings per urban household rising 124% (from 10,647 RMB to 23,900 RMB) in the last 10 years.

On the other hand, savings in rural China have declined somewhat over the same period, stabilizing at about 4,400 RMB in 2004. This pattern is consistent with the behavior of income variables for the two populations -- urban Chinese incomes have risen rapidly, while income growth in rural China remained relatively stagnant between 1997 and 2004.

Looking at total savings as a percentage of annual income at the household level, it is evident Chinese have a high propensity to save. In urban China, the average household has a total savings of 23,900 RMB, which about equals their average annual income. In line with the prevailing rural-urban disparities, the average rural household has 4,400 RMB saved -- representing about half of their average yearly income.

Savings Goals

What do most Chinese save for? At least half say that covering the costs of possible sickness or injury (59%), financing a child's education (56%), and providing for one's old age (53%) are savings goals.

Urban Chinese and rural Chinese differ somewhat in their major savings goals. While 44% of urban Chinese are saving to buy a new home, half that number (22%) of their rural counterparts mention this as a savings goal. And while 29% of urban Chinese are saving for travel and entertainment expenses, only 9% of rural Chinese have this savings goal. On the other hand, in rural China there is a greater likelihood to save for remodeling one's home and financing one's work or business.

Dissatisfaction With Savings

The poll reveals widespread dissatisfaction among Chinese with their level of savings. Sixty-eight percent of Chinese report they are "somewhat" or "very" dissatisfied with the amount of savings they have. In rural China, dissatisfaction is even higher at 73%. So even as the world marvels at the high savings rates achieved by China, most Chinese feel they are not saving quite enough.

Raksha Arora is an associate consultant at The Gallup Organization. She earned a master's degree in business administration with a specialization in finance from The Stern School at New York University, and gained investment strategy and industry analysis experience while employed with two leading global financial services firms.
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