Xinhua News Agency

Urban families prefer to save

PUBLISHED : Sunday, 23 March, 2003, 12:00am
UPDATED : Thursday, 11 June, 2015, 4:12pm

Urban families are continuing to save rather than spend, despite relatively low consumer prices and government efforts to stimulate spending.

A survey carried out in 50 cities across the country last month found that consumers were putting money aside for their children's education and large purchases such as cars, Xinhua reported.

'Results [of the survey] show that into 2003, bank deposits by urban Chinese continued last year's momentum and grew at a fast pace,' Xinhua said. 'The strength [of the increase in deposits] continues to be robust and bank deposits remain the urban public's most preferred choice of financial assets.'

When asked to rank different types of financial assets, 68.8 per cent of those surveyed said they preferred bank deposits, 8.8 per cent chose treasury bonds and only 6.7 per cent said stocks.

According to Xinhua: '34.1 per cent [of respondents] say - under the current price levels and interest rates - saving more money will be the most economic option.'

The Xinhua report did not reveal the sample size.

According to the survey, two motives are making urban families save more - education and the desire to buy cars, which were a luxury item for most urban families even a decade ago.

'The survey shows that the public is not eager to consume more but education remains a hot item on their spending list,' Xinhua said.

'Of those surveyed, 20.2 per cent say the motive behind saving [more] money now is for education - representing a 0.6 percentage point increase from the previous comparable period - making education the top consideration among urban Chinese in planning how to spend their savings.'

Steadily falling prices of private vehicles also spurred more families to save more money in banks, it said.

'Nine per cent of those surveyed say they plan to buy their own cars in the next three months - up 0.5 per cent from the last survey,' Xinhua said.

More than 17 per cent expected that prices of commodities would go up, compared with 11.3 per cent who anticipated cheaper goods and services in the months ahead.

China already boasts one of the highest saving rates in the world - a headache for the government, which is eager to encourage private spending to reverse a deflation spiral.

Consumer prices rose in January - up 0.4 per cent - raising hopes that government's efforts to stimulate spending have paid off.

Economists have said that one of the reasons Chinese are saving more for education is that they anticipate that school fees and other expenses will soar as the government allows more private schools.

Spending on cars has increased in recent years because incomes of urban families have risen, and the banks have moved to tap into the high-profit demand for car loans.