Household savings rose by 2.96 trillion yuan ($415.5 billion) in September, the most since March
The renewed build-up of savings may deprive the stock market of a key source of support
Household savings rose by 2.96 trillion yuan ($415.5 billion) in September, the most since March
The renewed build-up of savings may deprive the stock market of a key source of support
I fail to see the problem? Stock companies will se their stock decrease in value, which may make it slightly harder for them to find financial support.
But on the other hand, the huge savings in banks, will make that same cash available for many other things, like borrowing for small startups, and people borrowing for buying houses, cars, house improvements and on and on.
So this could as I see it, very well work as a stimulus to the economy outside the mega cooperations.
Bloomberg is stock market brained, but more generally China’s extremely high savings rate is regarded as a bad thing, because this is usually due to the combination of high income inequality, low social safety nets, and high housing costs.
Basically, there are too many poor households in China that are saving excessively due to anxieties about lack of safety nets and high housing costs.
Low education/financial literacy and poor regulation of financial markets also make Chinese households very risk averse to consuming, investing, or even taking out loans (credit cards are very unpopular). Everyone is just excessively dumping their savings in assets perceived to be safe.
Once savings are in “safe” assets, they are inaccessible to other productive uses like startups or other loans. This is the exact opposite of a productive economy, and is what the article tried to convey.
China’s high savings: Drivers, prospects, and policy implications - ScienceDirect - https://www.sciencedirect.com/science/article/abs/pii/S1566014125001049
Ahh okay, thanks for explaining, i was reading the headline and can’t exactly link both stuff together.