Much has been made of the fact that Americans are saving again – to the tune of a household savings rate that hovered around 5% in 2009. Yet while that may be a lot in a country where the rate had fallen to zero in recent years, it pales when compared to China. There, the current rate is around 30%. Why are Chinese such great savers?
It’s a question that has vexed economists for years. To find answers, most have focused on Chinese economic policies. But now a recent paper called The Competitive Saving Motive, written by economists Shan-Jin Wei of Columbia University and Xiaobo Zhangk of the International Food Policy, offers a different explanation: social policy.
China has had a strict one-child-per-family plan for more than 30 years. This, coupled with a cultural preference for male offspring, has led to a situation where there are roughly 122 boys born for every 100 girls. Statistically, this leaves one in five Chinese men with no prospects for marriage. Recognizing this, the authors suggest that Chinese families save more in order to enhance their sons’ marriage prospects. While the researchers don’t claim this is the sole explanation, they defend their conclusions by pointing out that the household savings rate tends to be highest in regions where the male-female sex ratio is also the most skewed.