On Thrifty China: The Yale Professor versus Me

14 Comments

I was just reading Yale Professor Robert Schiller’s article Thrifty China, Spendthrift America, which explains the apparent discrepancy of the saving rate in America versus what’s occuring in China.

While I cannot provide as indepth an economic analysis as the learned professor has made, I would like to touch upon some of the points he discussed in his article. In doing so, I will be using a wide range of academic journals (to prop up the leg of my somewhat wobbly desk, which I bought in a Chinese market a few months back). I don’t profess to be a China Expert – but I am in China, and that’s gotta count for something, right?

The Professor states:

The saving rate in China is the highest of any major country. China’s gross saving rate … is around 50%. By contrast, the saving rate in the United States is the lowest of any major country – roughly 10% of GDP.

Whenever anyone throws out that 50% number, I’m always reminded of that old joke that 99% of statistics are fabricated lies. In my personal experience, 50% is the first number that I tend to toss out off the top of my head, with 25% and 75% coming in tied for second place. These are the statistics I use, when I just don’t got no real statistics.

And moreover, whenever academics quote numbers about China, I can’t help but wonder… Are Chinese Official Statistics reliable?

The Professor goes on:

…the uptrend in saving in China began at around the same time as its one-child policy was implemented in 1979. . . The late Nobel laureate economist Franco Modigliani, in his last major published paper in 2004 (co-authored with Shi Larry Cao), argued that this demographic change explains much of the increase in the saving rate, as Chinese substituted investment in capital for investment in children.

True. Good point Robbie. But don’t forget about all those fabulous double-income gay families that we keep hearing so much about on CCTV…

Professor Rob:

For one thing, although the Chinese don’t elect their leaders, they trust their government more. According to recent World Values Surveys, 96.7% of Chinese expressed confidence in their government, compared to only 37.3% of Americans.

Are the remaining 3.3% doing alright? I’m just curious. (Don’t drop the soap, guys!)

Professor Rob:

Likewise, 83.5% of Chinese thought their country is run for all the people, rather than for a few big interest groups, whereas only 36.7% of Americans thought the same of their country.

Professor, please watch your choice of words. “83.5% of Chinese thought?” Try using the word “said.” I’m no Kreskin, but I do know there’s a big discrepancy between what people are free to think, and what people free to say in China.

Professor Rob:

As inequality deepens [in the U.S.], many who fall behind struggle to save face, consuming in order to maintain the appearance of success. At the same time, those who rise from low economic status revel in their newfound wealth by engaging in spectacular displays of personal spending … Of course, Chinese increasingly consume fancy new cars and designer clothes. But there is relatively less pleasure in public displays of consumption at a time when the prevailing national story is one of triumph over adversity.

Interesting. I should really pass on the professor’s article to all those Chinese dudes walking around with the Italian leather man-purses and shiny new Audis, or at the very least to that kid who owns 500 cell phones. It would be my guess (from what I see here on the ground in China) that public displays of consumption are in fact a means for people to show their personal triumph. But that’s just my thoughts…

Now to the professor’s credit, he does predict that as China continues to change, the Chinese people’s “enormous willingness to save . . . will fade.”

Similarly, I will go out on a limb and boldly predict that the winner of last year’s World Series will be the St. Louis Cardinals.

Talk on On Thrifty China: The Yale Professor versus Me


14 Comments
  1. Haha. I’ll have to give Schiller’s report a read. That bit about Chinese not having a “national story” that encourages them to flaunt their wealth makes me question if he’s ever been to China.

    I’ve not met a person in China – with wealth – that doesn’t flaunt it. And I’ve not met more poor people that pretend to (big Spring Festival dinners that they save for all year, wearing suits while they pick bottles out of the trash, etc.).

  2. Thanks for the link to Professor Schiller’s article. Some of his comments* seem to me to be very much guilty of accusations brought forth against western China scholars in an article, Have China Scholars All Been Bought?, I recently read in FEER. The article is about how western academics tend to selectively write on China and say things they know the CCP will approve of to keep from harming their professional connections in China and thus keep their careers going forward.

    * “For one thing, although the Chinese don’t elect their leaders, they trust their government more. According to recent World Values Surveys, 96.7% of Chinese expressed confidence in their government, compared to only 37.3% of Americans.”

    He’s no just quoting a figure, given the first sentence of this paragraph he actually believes it.

    I would argue based on the above figures that the majority of Chinese are happy with what their government is currently doing in China, specifically China’s spectacular rate of development, compared to Americans, the majority of whom are not happy with what their government is currently doing, specifically the disaster that is Iraq. Does this really translate into trust in the government for the Chinese? I doubt it.

  3. I wonder how the lack of a comprehensive social security and welfare system factors into that as well. I’ve had Chinese friends in SZ ask me about unemployment benefits in America and just sit there dumbfounded at the thought of it. At least to the best of their knowledge no similar comprehensive safety nets exist here.

    Do or die capitalism!

    And in my view conspicuous consumption is much more prevalent and ‘in your face’ than back home, even if back home there’s much more money to go around.

  4. Hey Kevin.
    Very interesting that you mentioned that article, Have China Scholars All Been Bought, as I was going to quote it in this post, but in the end cut it out. Found it via Stumbleupon, which is how I found the Schiller article.

    And Ryan, yeah, I would expect that this particular professor has likely only been to China once or twice, if that.

  5. Profile photo of

    @Kevin: Cheers for the link to that article – fantastic. You should submit more to the HHR. ;-)

    @Brian: “Do or die capitalism!” — too true.

  6. I’d like to be more active in submitting to HHR. I’ve even got the java bookmarklet on my bookmarks bar in Safari. I just have to remember to use it. RSS has almost completely replaced bookmarks for me now.

  7. Profile photo of Sean

    Robert Schiller seems like he is one of those western acedemics that does not speak the language and has never been to China for more than a few weeks on “Research”.

    Furthermore his stats come from walking around beida asking students random questions like faith in leadership. Do you think that the Chinese average person is going to open up to some random white guy asking political questions?

    I have a friend that is a Beida grad student and she says theere campus is crawling with western academics and reporters asking questions on subjects like good old Robbie’s.

    Robert you should get the coveted Recockulous Media Award for your coverage on China.

  8. Pingback: Journal-jism | Lost Laowai China Blog

  9. Pingback: Chinese Girl finds LIVE bug in instant noodles, uploads video | Windows Ninja!

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