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China: GDP rising, public spending too?

Indication that China's economy is close to second largest in the world came today with the release of Japan's growth figures for the second quarter.

Where's all the money going, Sohu economics forum member BRY seems to ask in this post from last week, “Why do Chinese always save so much?”, starting first by comparing the health care systems of Australia, Sweden and Thailand with that of China:

在我国,虽然正在的推进全民医保制度有助于缓解“看病贵”的问题,但保障之外的余额仍足以让一个家庭变得一无所有甚至负债累累,除非你能保证一辈子不得大病。

In China, while the universal health insurance system now being implemented has helped alleviate the problem of price gouging in health care, unless you can keep from developing any major sickness during your lifetime, the excess costs beyond coverage are enough leave a family with nothing to its name, or even in debt.

And the comparatively low cost of post-secondary education in countries such as UK, France and India:

而在我国,大学学费近20年的时间里上涨了约25倍,而同期城镇居民人均年收入只增长了4倍,大学学费的涨幅几乎10倍于居民收入的增长。一个人本科4年最少花费2.8万元,相当于贫困县一个农民20多年的纯收入,这还没有考虑吃饭、穿衣、医疗等费用。

In China, university tuition has risen to 25 times what it costs less than 20 years ago, yet during this same period of time the average income for urban and semi-rural residents has only quadrupled, meaning the cost of university education is increasing 10 times faster than these residents’ income. For four years of undergraduate study, a person will at the very least have to spend RMB 28,000, equivalent to twenty years of net income for a farmer from a poverty-stricken area. This doesn't take into account costs for other costs such as food, clothing or health care.

Followed by the state of old age pensions in China and elsewhere:

蒙古、朝鲜、古巴等实行计划经济的社会主义国家采取的是国家保险型的养老保险制度,国家宪法把以养老为主要内容的社会保障制度确定为国家制度,退休金支出全部由国家和企业承担,个人不交纳养老保险费。我国现阶段,国家机关事业单位实行的是国家保险型的养老保险制度,企业单位实行的是自保公助型的养老保险制度,而占全国人口多数的农民和城镇无业居民(或称灵活就业人员)要么游离于社会养老保险制度之外,要么个人必须承担全部20%的缴费。

如果上述三座大山仍不足以说明中国人爱储蓄的理由,那就加上住房。现在的房价之高足以让一个中等收入的家庭花掉大半辈子的积蓄,或者当一辈子房奴。

中国人爱储蓄是为了明天在使劲榨取今天。不是中国人守财,而是自己给自己在做保险,是想给子孙传下更多的财产。在社会保障体系还不够完善的今天,中国人只有以更忘我的奋斗,来换取一家人和下一代人富足安定。

Socialist countries with planned economies such as Mongolia, North Korea and Cuba each implement a retirement pension system based on national insurance, a social insurance system made into a national system through each country's constitution; retirement costs are entirely provided by the state, without the recipient having to pay pension fees. Presently in China, government employers use a national insurance model old age pension system, and corporations utilize a publicly funded private insurance model old age pension system. Farmers and unemployed urban and rural residents (including those without fixed employment), who comprise the majority of the country's population, either live left out of the old age social pension system or else shoulder the 20% of their salary in fees themselves.

If these three mountains aren't reason enough to explain why Chinese tend to save so much, then you can add the house. Current housing prices are elevated to the point that a middle income family has the choice of either spending more than half their life savings, or remaining slaves to a mortgage for the duration of their lives.

The reason Chinese always save so much is because everything that gets squeezed out of today gets spent on tomorrow. Chinese aren't money hoarders, rather it's that they're insuring themselves, and trying to leave something for their children. With the social insurance system as lacking as it is today, the only option Chinese have is to struggle selflessly in order to provide comfort and stability for their families and the future generation.

Related: the banks appear to be performing to expectation.

(The thumbnail for this post was borrowed from this photo of a RMB 100 bill taken by Flickr user Comer Zhao)

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