Chinese Save More Than Americans [Study]

With many economies stalling in the wake of a global recession, researchers at the University of Missouri decided to examine the household saving habits of people living in the world’s largest economies–the U.S. and China–to get a glimpse into how economic uncertainty is playing out at the microeconomic level. The study, soon to be published in the Family and Consumer Sciences Research Journal, looked at data from the American 2007 Survey of Consumer Finances and the 2008 Survey of Chinese Consumer Finance and Investor Education. What the statistics revealed says much about how culture and national economic policy can affect personal finance.


Rui Yao, the lead researcher and spokesperson for the project, says Chinese households typically save slightly more for retirement than American households, and much more for education and emergencies. Retirement savings averaged 51 percent of the Chinese population, compared to 45 percent of the American population. Nearly 60 percent of Chinese citizens set aside money for emergencies, while only 35 percent of Americans do so. But the largest savings gap between the two peoples involved education; 59 percent of Chinese households save for college tuition and expenses, compared to just 19 percent of American households.

Yao believes economy and culture greatly influence the amount people save. In China, for instance, social welfare programs like Unemployment, Social Security and Medicare do not exist. Chinese people who desire economic security during tough times have no other option but to save for the future. The motive driving educational savings in China is two-fold: Confucianism, the religious philosophy held by many Chinese, places a high value on education, and economic reforms made by the Chinese government in the 1980s requires citizens to pay a greater share of educational costs than in previous years. Although similar reforms have been made in the U.S. during the same period, American students can finance college expenses through subsidized government loans, reducing their need to save. Americans have also been long accustomed to making emergency purchases on credit, while the concept of “easy credit” still remains fairly foreign in modern China.

However, the similarities in retirement savings between the two countries proves to be quite revealing. Yao says that although pension programs and retirement welfare are much stronger in the U.S. than in China, doubts about the long-term viability of the Social Security program has motivated many Americans to increase their retirement savings. Many U.S. companies that once offered guaranteed pensions and benefits have also cut or reformed their programs in recent years, requiring employees to contribute more to their retirement plans.

Despite the strong retirement savings numbers, Yao believes both Americans and Chinese should be saving more for retirement and emergencies in these uncertain economic times. She makes a few recommendations for increasing savings motives and retirement security, including providing employers with incentives to offer retirement benefits and implementing a financial planning education program.

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