Ep.43 - The Amount Americans Save is a Joke in China (3 Minute Read)

Read Time: 3 Minutes.

Thanks to a project I worked on at BuzzFeed, I was introduced to a Chinese "BuzzFeed"-like app, Toutiao. Today, I started scrolling on the app to kill some time, and I paused on an article titled "Poor Americans? 61% of Americans don't have $1,000 in savings". That is shocking in the U.S. already. It is even more so to the Chinese, as they know a typical American earns 5x to 6x more than the typical Chinese.  Just to make sure the story is true, I cross-checked the story with domestic reporting, and it lines up with the story from CNBC here.


According to the Chinese official figure, the Chinese average annual income was $8,268 in 2016, a mere fraction of the income of an American. Yet, the average Chinese family saves about 50% of its income. It definitely seems unimaginably high to most Americans, as the most common rule of personal finance preaches 50/30/20, with 50% for fixed expenses, 30% for discretionary, and 20% for savings. Again, most people can't even save 20%, which is evident in the fact that 6 out of 10 Americans don't even have $1,000 in savings.

At the national level, another popular metric is gross savings rate, which gauges how much a country is saving as a whole. According to the World Bank national accounts data in 2016, China's gross savings rate is 46% vs. America's 18%, a whopping 28 percentage point difference.

world bank national accounts data 2016



To me, having very savings is not something to be proud of. However, the Chinese have a different take. After reading dozens of comments on the article, I sense people actually overwhelmingly admire the situation Americans are in.

The reasoning goes that Americans must have such little savings, because of all the strong social safety nets, such as unemployment, housing, healthcare, and retirement systems in place. This can seen in the most upvoted comment by 135 thumbs up. The comment goes, "Americans don't have to worry about things. What do they have to save for?"


LMAO! I almost fell out of my chair. Only if they lived in the States... Speaking of social safety programs, unemployment insurance is insufficient, housing vouchers are a joke, healthcare insurance is falling apart, and social security is unsustainable. It is good to know, the facade of a strong social safety is still alive and well overseas in China.



Americans tend to consume first, and pay later. In my opinion, we Americans are caught in a habitual state of debt, which is legitimized by the societal norm, and all the ads on TV.  You know this well if you went to college in the last decade. We started out with student debt, usually not an insubstantial amount. At some point, we need to purchase a first car. We are led to believe it's completely normal to buy a car we haven't saved for. The same goes for smaller items. One great example is you can pay off our cell phone with a 24-month plan, so you can "afford" that $900 new iPhone. 

Chinese save first, invest second, consume third. This is the typical Chinese mindset. It has its pros and its cons. One great thing is that it's a more responsible lifestyle. You will hardly meet a Chinese person who does not have at least $1,000 in savings, even if he/she barely makes a fraction of an American's income. There are also negatives, as it is a consequence of a fragile social support system in China. Since people don't feel safe with the social support provided by the government, they are forced to save for their own rainy day. 

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