Chinese saving

by Rob Horning

8 May 2009


Via Barry Ritholtz comes this chart, depicting trends in consumption in China:

As Ritholtz notes, a similar chart for the U.S. would be somewhat different. Economists who are concerned about global trade imbalances have long wonder when the Chinese consumer will emerge and begin to soak up its share of the world’s output, instead of the Chinese Central Bank stockpiling foreign currencies. This chart seems to suggest that it won’t happen anytime soon. What data like this makes me wonder is how the Chinese experience their own relative prosperity, how the consequences of rampant economic growth are experienced if not in terms of increasing purchasing power and more goods and more choices.

Sometimes the argument is made that the Chinese must save more because the social safety net there is extremely tenuous—they don’t even have the comfort of titles to property and social services are spotty and the bureaucracy presumably needs to be greased with many bribes and that sort of thing. This sort of logic would then be flipped to argue that a low savings rate is proof of a just, confident, and well-functioning society—it’s not a matter of impulsive consumers as the wrongheaded moralists and anachronistic puritans would have you believe. It strikes me as a conundrum of consumerism that the failure to save could be read blithely and myopically as the accomplishment a successful economic equilibrium, as though the fund for future investment to sustain those consumption levels were entirely irrelevant. Consumerism—an economic order based on maximizing consumer spending—must encourage the idea that savings are a kind of “glut,” a residual that proves an inefficient sort of budgeting has taken place somewhere. Personal savings can then feel like a personal failure to find enough stuff to spend one’s earnings on, to be sufficiently full of desires, to make having worked worth it. In a culture in which we are basically compelled to spend to keep the world as we know it going, accruing savings can leave us feeling guilty for not wanting enough. It’s possible that at this point, we would feel too guilty to ever believe that we are satisfied with what we have.

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