World

Despite Record-High Savings Rate, Chinese Would Like to Put Away Even More

by Tao Wu
Senior Research Director, Gallup China

Healthcare, retirement most common savings goals

GALLUP NEWS SERVICE

PRINCETON, NJ -- China's massive trade surplus has the Chinese government trying to figure out how to reorient growth around domestic consumers -- that means getting people to save less and spend more. Gallup World Poll results suggest that's not going to be easy; despite the fact that they already claim the highest personal savings rate in the world, Chinese consumers would like to save still more. More than two-thirds say they are either "somewhat dissatisfied" (47%) or "very dissatisfied" (21%) with the amount of savings they have. Just 2% say they are "very satisfied."

What drives Chinese to save? The primary reasons are universal worries about healthcare, retirement, and education. About two-thirds say they are saving to cover the costs of possible sickness, and to take care of themselves in their old age. The share of personal expenditures allocated to medical services has increased significantly in China. Currently, 40% of urbanites as well as 72% of rural dwellers do not have healthcare coverage, according to Chinese government statistics.

Public primary and middle school is supposed to be free in China but in many cases it is not. Education is a large annual expense for most Chinese families. Nearly 6 in 10 Chinese in both rural and urban areas say providing for their children's education is one of their savings goals. It's possible that number will come down among rural Chinese; in 2006, the government announced it would exempt primary and middle school students in the rural west from tuition and other education-related expenses starting in 2007.

The increased outlay of public money into rural schools is indicative of the Chinese government's effort to increase private consumption. Currently, public programs in health, education, welfare, and pensions total only about 3% of GDP. Chinese households need to see the government providing more social services in these areas, so that fewer feel the need to put most of their discretionary income into savings.

I am going to read some of the savings goals that people have. As I read each goal, would you tell me whether it is a savings goal of yours, or not?

 

 

Urban

 

Urban

High
Inc.

Low
Inc.

 

%

%

%

For retirement

68

59

74

For healthcare

66

63

68

For children's education

59

61

47

Buy a new home

49

59

40

Buy home electronic items/other consumer durables

44

49

36

 

 

Rural

 

Rural

High
Inc.

Low
Inc.

 

%

%

%

For healthcare

67

70

62

For retirement

64

60

58

For children's education

58

64

41

Buy home electronic items/other consumer durables

42

47

34

Buy a new home

41

43

40

Survey Methods

Results are based on 3,730 face-to-face interviews conducted across China in October 2006, with residents aged 15 and older. For results based on the total sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±2 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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