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Chinese people are rich? "560 million people do not have bank savings", reported by the Chinese media

(19 Nov) Lots of people have the impression of generosity and spending money like water for Chinese consumers. However, the savings rate in China has gone down to the lowest in the record and is still having a downtrend. From the 50% in the past to the current 45%, China has become the "country of debit" instead of the "country of savings".

According to the news report by Sohu (《搜狐網》), there are 5.6 billion people in China that do not have savings. The debt ratio of the Chinese citizens used to be almost zero, but it has risen rapidly in the past ten years with the total debt exceeding 200 trillion CNY, and 130 thousand as the per capita debt amount.

Sohu reported that China was still the "country of savings" in 2010, and the reason for turning into the "country of debit" in ten years is divided into four main issues. First, "the rising speed of wage could not keep up with the inflation, citizens are bearing a lot of debt, not to mention saving money." In most private enterprises, income growth is often unable to beat the rise of commodity prices. Many of the families have an offset at income and cost and do not have much money for savings. Some people even use payment by installments when buying things, "It is not strange to see the rise of debt ratio."

Second, "since the marketization of real estate, the price of houses is like a wild horse without the leash and became tenfold or even more in twenty years." In the past, although people had a low salary, there were not many places for spending money, housing was also arranged by welfare organizations. People nowadays clear out their bank account for the down payment of houses, leading to a low savings rate. Because of the over-expensive housing price, over 95% of people could not pay one loan but took second or third loan from the bank for 20 to 30 years. For that, the debt ratio goes up sharply after 2015.

Third, "Many citizens have to buy cars except houses." When people go out for work, it is more effective to drive a car. Although a car only costs 100 to 200 thousand (CNY), which is not so high compared with housing price, there is still stress for a normal family to pay for the installments in 24 months. Except, the installment for the car, it requires an annual check-up and other expenses, which could be stressful for a working-class.

Fourth, "The rise of debt ratio is related to the rise of the consumption view of youngsters", according to the data, the debt per capita of groups born after 1990 is 127 thousand, and they have to pay off with the salary of 18 months. At the same time, 1 in 4 people in the debted young group is using the microfinance mechanism, Huabei, by the Ant Group; and 2 in 3 young people tend to buy a mobile phone paid by installment. The reason is the young group prefers to enjoy life and pursue the quality of life, tend to after the consumption view in European countries.

Source: Hong Kong Yahoo News

Translated by: Hong Kong Echo

#China #Chinese #InDebt #SpendMoney #NotSaving