Puzzle of High Saving Rate in China - Myth and Reality Research Paper

Puzzle of High Saving Rate in China - Myth and Reality - Research Paper Example Other economists believe that these high rates of saving are a part of financial behavior or financial attitude development that resulted in the tremendous growth of Chinese economy. Among many cynical reasons, one reason was that the increase in the number of male children born in China has resulted in this trend. The ratio of male to female children in China is around 122 men for every 100 girls. This means that one in every five man cannot find a girl in the marriage market. Hence, in order to give them competitive edge in the marriage market, these people try to save more and build up more wealth so that they can find a wife in the future. This is one f most widely accepted reason of increase in saving rates in China (Wei, 2010). Other reason for growth of saving in China is declining dependency ratio. This means that more people nowadays are working in China and hence since income of people is high they can afford to save more since they do not have to bear the expense of their dependents or people who rely on them. Another reason for this growth in saving rate is the growth of national income and GDP per capital in China. This means that people are earning more than they were earning before and hence this gives them more chances to save their money for future and precautionary motives. Table 1: Comparisons of Saving Rates as percentage of GDP Source: Yi and Ma If we compare China with other countries with other countries we can say that over time it has become far superior to other countries in terms of saving. China’s propensity to save from year 1998 to 2008 has increased from 39% of its GDP to 54.3% of its GDP. This shows a growth of around 15% over this period time. Similarly, Singapore also has a large propensity to save but over a... Hence, in order to give them a competitive edge in the marriage market, these people try to save more and build up more wealth so that they can find a wife in the future. This is one f most widely accepted the reason for an increase in saving rates in China (Wei, 2010). Another reason for the growth of saving in China is declining dependency ratio. This means that more people nowadays are working in China and hence since the income of people is high they can afford to save more since they do not have to bear the expense of their dependents or people who rely on them. Another reason for this growth in saving rate is the growth of national income and GDP per capita in China. This means that people are earning more than they were earning before and hence this gives them more chances to save their money for future and precautionary motives. If we compare China with other countries with other countries we can say that over time it has become far superior to other countries in terms of saving. China’s propensity to save from the year 1998 to 2008 has increased from 39% of its GDP to 54.3% of its GDP. This shows a growth of around 15% over this period time. Similarly, Singapore also has a large propensity to save but over a decade its growth in saving has been nothing as compared to China. Singapore’s propensity to save has risen only by 5%. Hence, we can also conclude that it is a common practice in this region to save more and hence these countries have a high propensity to save as compared to Western nations.