It is almost inevitable that when you mention “America” to an older generation of Chinese people (30 and up), a discussion of differences between their motherland and the West will come up. There is a story that Chinese people like to tell about the differences in 消费 (xiao1fei4, consumption) between the U.S. and China:
There are two old women, one is Chinese and the other is American. The American put out a mortgage for her home, lived in it, and right before she passed away, she finished paying her mortgage. The Chinese woman saved until she was about to pass away, and finally saved enough money to buy a house.
China Journal reports that China’s economy is a rare case in the world right now, in that it has a “relatively robust banking system and sound government finances.” However,
The problem is too little private consumption, despite encouraging signs from shoes to appliances that retail sales are holding up well. Instead of unlocking the buying power of its 1.3 billion people, for instance by deregulating services like health care or media, the government takes the lead with often billion-dollar bets. It was a good strategy to get infrastructure built, but it is an expensive one to sustain.
At around 35% of GDP, China’s private consumption in 2007 was less than those of other major countries: 71% of GDP in the U.S., 64% in the U.K. and around 56-57% in Australia, Canada, France, Germany and Japan, according to JP Morgan .
Despite a stable domestic banking system and government finances, the global recession has undoubtedly affected Chinese people. For example, users on a BBS-oriented networking site called douban.com “have formed a number of groups devoted to sharing ways of saving money.” 56minus1 highlights some user groups, ranging from hundreds of members to over 12,000 members; these groups all share strategies and know-how on saving money in day-to-day life.
On the other hand, despite the recession inciting more Chinese people to save, it is true that China has a culture of saving that outlasts the global recession. Despite many efforts to encourage spending (e.g., tons of sales and endless specials), Chinese people still, relatively speaking, spend much less than residents of other countries. Part of it is a generational issue; the ageing population may not spend much (nor may they have much to spend), but younger generations, and perhaps those set out to bribe government officials, seem to have no problem spending. I suggest analysts break down spending in China by age groups and see if there are different results. Of course, there are many other reasons why Chinese people have been saving more recently. This WSJ article highlights a few issues: oversupply, government policies, and the global recession.
It is also clear that as some Chinese people get richer, many more are left behind; the wealth inequality in China is a huge issue (searching “wealth inequality in China” will give you over 80,000 articles in Google Scholar). While statistics may show that private consumption is relatively low, it may be because that many of the 1.3+ billion people in China just do not have the means for spending. And with the strained welfare system (too many people, too little money), many Chinese are also saving up what little money they do have to pay for their child(ren)’s education, medical bills, housing, and food.
In related news, Chinese women are supposedly finding their foreign sugar daddies less attractive, with the proportion of women willing to marry a foreign man dropping from 42.5 percent (before the financial crisis) to 16.8 percent (after). In the face of a global financial crisis, Chinese women are being more conscious about the accumulation of wealth/saving, and since “most foreigners did not care that much about saving,” women have been turning to Chinese males.