The saving habits of chinese are quite different when compared to the rest of the world. They have a unique style of starting to save only when they reach around 40. It is weird. But it has its own reasons.
A number of things have influenced this savings pattern. Arguments can be made that the current sociocultural norms in China, the ones that dictate that the working population take care of the dependent population, especially the old-aged section, may have a huge impact on the savings model. But savings patterns of an entire country, especially a country as diverse as China, cannot be explained purely through sociocultural reasons. The economic matters behind this decision, especially high cost of housing and living in urban China, have to be explored.
There are three main factors that contribute towards our understanding of this unnatural savings pattern among urban Chinese youth:
- The one-child policy implemented in China has an economic impact. The parents are preparing for old age conditions and situations always.
- The burden of providing the older generation with financial assistance falls on the Chinese youth when they are middle-aged, which might have an impact on the amount of money they can successfully save, no matter how high their expected or current income is.
- New research shows that the prevalence of inter-generational residences, and the current high costs of real estate in China has an impact on savings trends. The 2002 China Household Income Project data shows that among working males, aged 30, about half still live with parent(s) or in-law(s). This reduces consumption expenditure among the Chinese youth, thereby increasing the levels of savings in youth. Among the middle-aged, land-owning population, the savings rate observes a fall, due to the high cost of real estate.