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2008, No. 19
Posted 2008-08-02

Why Do Chinese Households Save So Much?

by Luke M. Shimek and Yi Wen

Chinese households may improve their welfare by consuming more now because they can reasonably expect to be much richer in the future. Despite this fact, China’s saving rate is one of the highest in the world. This essay discusses three reasons why: uncertainty about the future, the need for retirement income, and an underdeveloped financial market and banking system.