As Chinese go on luxury shopping binges abroad and young people flaunting their wealth at home and glitzy shopping malls pop up everywhere, it may seem strange that China has one of the world’s highest personal savings rate.
It’s a country of contradictions.
Many urbanites seem to be burning money in a materialistic society, while their parents are still cautious and thrifty, though not as miserly as their own parents.
China saves more than half of its GDP, and its personal savings rate is one of the highest in the world, as m Social safety net can ease fears that fuel saving uch as 50 percent at one time. The
global average of personal savings is around just 20 percent.
In 2009, the People’s Bank of China estimated personal savings at about 20 trillion yuan (US$3.2 trillion).
As China becomes richer and powers ahead, experts say that for the economy to really expand, people need to unlock their savings and consume more.
That can be a hard sell in a country where thrift is a deeply ingrained tradition and has long been considered a virtue. Confucius said, “Extravagance leads one to be arrogant and thrift encourages humility.” Tumult and hard times meant every grain of rice was precious.
Young people today haven’t lived through hard times. Many seem to be doing their part to boost the economy, and many are known as yue guang zu (月光族) or “monthly salary spenders,” living paycheck to paycheck and saving nothing.
Some post online pictures of themselves with expensive handbags and cars. They disdain their parents’ conservative financial ways. (There are young savers, of course.)
Hardly anyone has read Balzac but many young urban people are familiar with the character Felix Grandet, the wealthy miser in the 1833 novel “Eugénie Grandet.” He is so obsessed with money that he lives in a rundown house that he refuses to repair.
Today, Grandet (Ge Lang Tai 葛朗台) has become a derisive buzzword in some circles, meaning a ridiculously tight-fisted person.
“The most frugal person I know is my mom,” says Feng Chenglan, a 30-year-old mathematics teacher at a primary school. “She is a real Ge Lang Tai. She only uses the washing machine after 10pm because electricity rates at night are half of the day rates. She buys vegetables and fruit after 6pm when the price is lower because they don’t appear so fresh. She buys bread after 8pm for the same reason. She is busy at night.”
One woman surnamed Liu says her parents have relaxed, saying it’s better to do the laundry after 10pm, but no longer insisting on it.
The complaints about parents for their stinginess are common among young people, since they don’t understand why their parents are scrimping particularly when it’s not strictly necessary.
“My parents rent two apartments, so money is not a problem,” says Wang Chenhua, a 37-year-old business consultant. “But they don’t know how to spend, it’s all in the bank and they live as though this were still the 1980s. My father wears the same T-shirt that looks riddled with machine gun holes. When I enter their apartment, everything is vintage, it’s like a time tunnel.”
He says he offered to renovate the apartment, but they refused.
The saving habit is not likely to end soon, even as it does relax. Many old people still remember hard times, though many urban young people have never experienced that period.
“I clearly remember that I was taught not to waste even a single grain of rice when I was still a small kid,” says Ren Peiwen, a 33-year-old HR manager. “I wore my elder sister’s clothes and my mom would patch our clothes.”
She believes that her mother’s inherited frugality is a good thing.
“I also teach my son not to waste anything he eats or uses,” she says. “This is in our blood since the Chinese nation experienced so much upheaval in the past century — conflicts, natural disasters, plus political turmoil.”
Some people still feel insecure, and until an effective social safety net is in place, people would continue saving for retirement in a rainy day.
Ren Jun is a department manager at an international company, earning nearly 40,000 yuan (US$6,560) a month. “But I save nearly two-thirds of my salary every month, since I don’t know what will happen to me,” says Ren, who is in his 40s. “What if I’m laid off? What if I get sick? What if my parents or in-laws fall ill? Cancer treatment can bankrupt a whole family.”
He says he seldom takes his family on overseas vacations. “In my view, the money should be spent on the right thing.”
Alice Song, a 32-year-old accountant, says she saves every penny. “My mother is a stingy person, and when I was a small girl I hated her so much for not buying me beautiful clothes and shoes. I envied my classmates who always had pretty clothes,” she recalls.
Now that she has a family and her own daughter, she understands the importance of saving. “Every month, I have to pay the mortgage, and the cost of raising a child and education in Shanghai is daunting. Our double income can cover the cost but who can guarantee that we will be able to earn the same money in 10 or 20 years?”
According to psychologist Feng Yalan at East China Normal University, Chinese people, especially ordinary people, have been “once so poor that they even had to split one penny into two.”
She cites the film “1942” (2012) about the drought and famine in central China during the War of Resistance Against Japanese Aggression (1937-45).
The collective memory of suffering over the past century has become part of China’s genetic mindset, she says. People are sometimes uncomfortable with their parents’ extreme frugality, “but they later find themselves doing the same thing.”
There are always conflicting signs. Ordinarily frugal Chinese are splurging on luxuries in Europe and the United States. China has become a rising power in luxury consumption around the world, as well as domestically.
“Honestly, I’m not a person who is keen on money,” says Zhu Kun, a 43-year-old middle school teacher. “But this summer I visited the US for the first time with my family and I was out of control with my credit card. I bought nearly 10 bags and five purses. Goodness, I could use these for the rest of my life!”
“I call this the retaliatory rebound,” says psychologist Feng. “Some are buying luxury items more for the ‘bargains’ and huge price gap than for the items themselves.”
Zhu concurs. “When I found that the same bag in Shanghai sells for 10,000 yuan while only 5,000 yuan in the US, I couldn’t help myself,” she says. “At the time I paid my bill, I felt that I had earned an additional 5,000 yuan.”
“Chinese are good at leading a life of pinching and scraping,” says Jay Wu, a financial manager. “Because of the price gap between China and the West, Chinese people know the best way to save money through overseas trips or buying online. That’s Chinese wisdom!”
Wang Yishui, a retired teacher in her 50s, is giving up her frugal lifestyle and obsessive savings.
“I used to be very thrifty about every penny,” Wang says, “but several years ago I was seriously ill. At that time I suddenly understood that people should be good to themselves because all the money in the bank is meaningless when I leave this world.”
Now Wang and her husband travel every year, visiting Europe, the US and Russia so far.
“This is the real value of personal savings,” she says. “I am happier than before, since I don’t have to think about how much money I could save, but how much I could enjoy life.”
Joanna Li, a 32-year-old advertising company employee, says money is meant to be enjoyed.
“I don’t have much savings,” she says. “All my money is used on traveling, dressing up and enjoying delicious food. Daily pressure is already very heavy and I need to do something else to find the real beauty in life. Otherwise, life would be too miserable.”
Some of her friends share her “live-for-today” attitude.
“No one knows what will happen tomorrow or even the next moment. I don’t want to have any regrets, life is too short. If money can bring me some happiness, then it has real value,” Li concludes.