Telling statistics from Philippine’s National Statistical Coordination Board.
The bottom 30% spends over 60% on food. Remember that there was a commodity price boom before the global recession?
The above shows the so called Engel’s law.
With the goal of boosting internal demand in mind, I would suggest the Chinese government do some equivalent survey in the villages, before pushing down the policies.
Of course, what to do afterwards is another matter.
A very different population map. The complete report here [PDF].
This is China.
Have some aspiration and do some prep reading. You can work it out on your own, or find someone dumb who couldn’t care less.
A side note: I am not against wealth. Well, who does?
Chinese economy needs a structural change, and many seem to agree that to stimulate domestic demand is key.
In my view it is something rather fundamental, but short-cut ideas fly around. Look at this guy, who is a people’s representative of the National Congress, advocate a nutty idea of national holiday to release domestic demand. By that logic, unemployment would really help.
BTW, the guy owns a tourism company, so that more leisure time would surely boost his business, and he spoke bluntly about it. Great. While convening to speak for the people, why not as well use the marketing platform to speak for himself?
Recently an usual thing happened – the government decided to subsidize farmers to make home appliance purchases by reimbursing 13% of sales price. Items include TV, cell phone and fridges.
It’s a serious project. They even built an online information management system for it. According to one village survey, farmers are satisfied, though not without concerns.
It is somewhat another unprecedented, well-intentioned socialism move by the government.
Leave the gun, take the cannoli.
There is a cute little household wealth survey by Statistics Bureau in 2002, which helps explain the high saving ratio of Chinese consumers.
“[..]子女教育、养老、防病成为居民家庭进行储蓄的主要目的。在调查问卷列示的十余种储蓄目的当中，把子女教育摆在首位的家庭最多，达到36.5%。而实现子女教育消费则周期较长；排在第二位的储蓄目的是养老，选择率为31.5%，我国目前已步入老龄化社会，但由于社会保障制度尚不完善，不少被访者特别是中老年被访者对未来养老问题表示担忧，故以此为首要储蓄目的的家庭也超过了三成；排在养老之后的储蓄目的是防病，选择率为10.1%，在医疗制度改革后，由个人承担的医药费比例明显提高，居民家庭用于治疗和药品方面的支出大幅增长，因此以防病作为首要储蓄目的的城市家庭逐渐增多。除子女教育、养老及防病外，选择率靠前的储蓄目的还有买住房（7.2%）、子女婚嫁（5.7%）和防失业（3.0%）。”
I have an earlier attempt to tackle here.
If you look at the household financial assets of Japan, another Asian high-saving rate country, the household balance sheet looks almost the same, though of different magnitude and for different reasons.
The United States is a completely different case. Take a mortgage, take a dozen of credit card, and cross over what’s on the shopping list or not, then pay down overtime, or never.
It is not a contemporary phenomenon driven by sophisticated financial engineering, but started a century ago.
