The revealed that total savings deposits as at the end of
December 2005 was 14 trillion yuan (US$1.75 trillion), a record
figure according to a January 16 Beijing Youth Daily
report.
It is also the third time that the total saving deposits of both
urban and rural residents surpassed 10 trillion yuan (US$1.25
trillion) in the last year.
In January 2005, the figure was 12 trillion yuan (US$1.5
trillion), and in May, that figure reached 13 trillion yuan
(US$1.625 trillion).
According to PBOC statistics, bank account balances totaled
28.72 trillion yuan (US$3.59 trillion) as of December 2005, an
increase of 18.95 percent from the year before.
The fourth quarterly survey conducted by PBOC in 2005 showed
that 62.1 percent of account holders thought that interest rates
were too low, representing an increase of 2 percentage points from
the previous survey; 36.3 percent felt they were acceptable, a
decrease of 1.4 percentage points.
Despite these sentiments, account deposits continue to rise.
One of the reasons why this might be is that financial burdens
on the average Chinese continue to get heavier. Issues such as
education, retirement and housing compel people to save.
Education is perhaps the most expensive consideration. A survey
conducted in Changzhou, Jiangsu Province, found that a family has
to spend an average 131,000 yuan (US$16,375) educating their child
for 19 years, from primary school up to university, based on 2005
prices. This is 51,000 yuan (US$6,375) higher than 1999
estimates.
Escalating property prices also stretch the financial limits of
the average person. An 80-square-meter house in the city of
Hangzhou or Wenzhou, Zhejiang Province, is about 27.54 times the
average annual income of the average local resident. The
international standard for developing countries is about four or
five times.
Further, up to 80 percent of residents do not have endowment
insurance, and 85 percent do not have medical or health
insurance.
Although total savings deposits are 14 trillion yuan (US$1.75
trillion), implying that each account holder has more than 10,000
yuan (US$1,250) in their account, the Gini Coefficient of
disposable income stands at 0.447, higher than the international
warning figure of 0.4. The Gini Coefficient is a measure of income
inequality and fluctuates between zero and one, one being
undesirable.
Experts believe that those with higher incomes should be able to
invest more of their money through channels other than savings
accounts. But there is currently a dearth of investment
options.
Further, confidence in the stock market is relatively low.
Dividends earned in the 11 years from 1993 to 2003 were the lowest
at 23 percent in 1997, and the highest at a mere 56.5 percent in
2001. Moreover, as much as 65 percent of listed companies or
enterprises paid no dividends to their investors.
(China.org.cn by Wang Ke, January 17, 2006)