Why do the Chinese save so much?

[phk]

Why do the Chinese save so much?

We all know that there are many more men in China than women and here is what that equilibrium looks like:

http://bakadesuyo.com/why-do-the-chinese-save-so-much

You must be logged in to read this quote.

[Beet]

This is a very interesting article, thanks for bringing it to the attention of the forum; and surely Prof. Wei knows something about it.

Still, most articles I've seen on this topic downplay household savings and play up corporate and SOE savings. The reason seems to be that the empirical data show household savings peaked in the mid 1990s, even as the overall savings rate, due to corporations and SOEs, has been rising. The same phenomenon has been occurring across East Asia.



For example, in "The Myth of Chinese Savings", Jonathan Anderson writes "it must be admitted that Chinese households do save quite a lot, anywhere from 16% to 18% of gdp, which is a very high number by either developed or emerging standards. But here’s the crucial catch: When we look at the veritable explosion of increased savings coming out of China over the past five years, virtually none of it came from the household sector. Rather, according to the best available estimates based on flow of funds data, the real story is the sudden rise of gross corporate savings, which shot up to more than 26% of gdp by 2007 from about 15% of gdp at the beginning of the decade."

----------

Also, the conclusions here are a bit counter-intuitive. The premise of household with sons saving more to increase their market value assumes that sons need more market value because of their relative abundance. But the social factor that cause a disproportionate number of sons in the first place is precisely their overvaluation in comparison to daughters. Families want sons because they think these sons will cost less than daughters, not more!

Could an alternative explanation be that socially conservative communities where sons are over-valued also over-emphasize the responsibility of men to provide for the financial well being of the family, thus requiring families with sons to save more? In other words, social conservatism is causing both more sons and more proportional savings among families with sons. To me this makes more sense because it explains why families in these areas continue to want sons more, even if sons require more savings financially. But admittedly, my hypothesis would require another study correlating socially conservative attitudes with both birth gender ratios and savings rates.

The solution to gender imbalance is a good old fashioned dose of feminism

[opebo]

It is not surprising that a high savings rate isnormally caused by a bad life.

[Bo]

Because they can't afford to spend much.

[Franzl]

Because they can't afford to spend much.

That makes a lot of sense

[bgwah]

Because they can't afford to spend much.

That makes a lot of sense

It all comes together once you see that he likes apple pie.

[Bo]

Because they can't afford to spend much.

That makes a lot of sense

It all comes together once you see that he likes apple pie.

The only reason I wrote that was to be revenge for pnrocket or whetever his name is posting extreme spam on a serious thread that I started in the Constitutional Law section.

[Ban my account ffs!]

China needs to get rid of the one child policy completely and focus on education for women and family planning.  I'd wager that even if they canned the one child policy completely, the fertility rate would remain below replacement level at this point.

Look what Iran did... they are in the midst of a massive demographic transition as the number of children born to each woman has fallen from 6 to 2 in 20 years.  And they'll be much more prosperous for it.