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China's savings rate world's highest (3)


08:36, November 30, 2012

(CNTV screenshot)

Zhao Longkai, economist of Peking University, said, "The fundamental reason for such high savings is uncertainty about future. Without an adequate social welfare system, many people have to save enough money on their own for their pension and medical expenses. That’s especially true for the middle-aged generation, who would otherwise be a major force of consumption. Not only do they have to save money for their elderly parents, they are also worrying about their children’s education and healthcare."

But it’s not at all easy for younger generations.

Like other young people, Song used to go straight to the shopping malls, bars or movie theaters as soon as he got paid.

But now the pressures of life mean his desire to splurge has to come second.

The government says it’s vital to turn savings into consumption at a time of global economic recession. But how much that can be achieved depends on how secure people feel in a country going through massive economic transition.

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