China
The Worse Banks Treat the Chinese, the More the Chinese Save
Over the years, there have been lots of explanations from why Chinese save so much. Here’s a new one: the worse that Chinese banks treat their customers, the more that Chinese customers save, an International Monetary Fund study says . Since the mid-19990s, China’s urban household savings rate has increased to 30% of disposable income from 19%. That’s also been a time period when China’s per-capita income has risen five-fold. It would make sense that the richer that people became, the less they would save. But in China, it’s the opposite. Why? Some economists argue that the Chinese save to make up for a lousy pension and health-care system, knowing that they’ll have to pay steeply if they get sick. Others say the Chinese want to buy apartments, which China’s communist government made widely available for sale in the late ‘90s. Still others say that families of boys save especially a lot because they want to be able to help make their sons better marriage bait. IMF economist Malhar Nabar has a different theory. The Chinese, he says, have a target amount of savings in mind to pay for homes, appliances, health care and what have you. And they will try to reach that target no matter what. So when banks pay less interest, after adjusting for inflation, they’ll save more. And when they pay higher interest, they’ll save less because it’s then easier for them to hit their targets. Since 1996, the rates at Chinese banks have gotten progressively worse — meaning that they have fallen further and further below the rate of inflation. As a result, the Chinese have saved more and more. Thus, the worse the banks treat their customers, the more their customers save. “A sustained increase in the interest rates on bank deposits, and wider access to alternative investment opportunities would make it easier for households to meet their target saving accumulation,” Nabar writes. In other words, they would save less when the banks treated them better.
Over the years, there have been lots of explanations from why Chinese save so much. Here’s a new one: the worse that Chinese banks treat their customers, the more that Chinese customers save, an International Monetary Fund study says . Since the mid-19990s, China’s urban household savings rate has increased to 30% of disposable income from 19%. That’s also been a time period when China’s per-capita income has risen five-fold. It would make sense that the richer that people became, the less they would save. But in China, it’s the opposite. Why? Some economists argue that the Chinese save to make up for a lousy pension and health-care system, knowing that they’ll have to pay steeply if they get sick. Others say the Chinese want to buy apartments, which China’s communist government made widely available for sale in the late ‘90s. Still others say that families of boys save especially a lot because they want to be able to help make their sons better marriage bait. IMF economist Malhar Nabar has a different theory. The Chinese, he says, have a target amount of savings in mind to pay for homes, appliances, health care and what have you. And they will try to reach that target no matter what. So when banks pay less interest, after adjusting for inflation, they’ll save more. And when they pay higher interest, they’ll save less because it’s then easier for them to hit their targets. Since 1996, the rates at Chinese banks have gotten progressively worse — meaning that they have fallen further and further below the rate of inflation. As a result, the Chinese have saved more and more. Thus, the worse the banks treat their customers, the more their customers save. “A sustained increase in the interest rates on bank deposits, and wider access to alternative investment opportunities would make it easier for households to meet their target saving accumulation,” Nabar writes. In other words, they would save less when the banks treated them better.
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The Worse Banks Treat the Chinese, the More the Chinese Save
Business
Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
Gordonstoun school severed ties with Hampton Group over espionage allegations against chairman Yang Tengbo. He denies involvement and claims to be a victim of political tensions between the UK and China.
Allegations Lead to School’s Decision
Gordonstoun School in Moray has cut ties with Hampton Group International after serious allegations surfaced regarding its chairman, Yang Tengbo, who is accused of being a spy for the Chinese government. Known by the alias "H6," Mr. Tengbo was involved in a deal that aimed to establish five new schools in China affiliated with Gordonstoun. However, the recent allegations compelled the school to terminate their agreement.
Public Denial and Legal Action
In response to the spying claims, Mr. Tengbo publicly revealed his identity, asserting that he has committed no wrongdoing. A close associate of Prince Andrew and a former Gordonstoun student himself, Mr. Tengbo has strenuously denied the accusations, stating that he is a target of the escalating tensions between the UK and China. He has claimed that his mistreatment is politically motivated.
Immigration Challenges and Legal Responses
Yang Tengbo, also known as Chris Yang, has faced additional challenges regarding his immigration status in the UK. After losing an appeal against a ban enacted last year, he reiterated his innocence, condemning media speculation while emphasizing his commitment to clear his name. Gordonstoun, on its part, stated its inability to divulge further details due to legal constraints.
Source : Gordonstoun cuts ties with business chaired by man accused of spying for China
Business
China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
The Chinese government demolished the Rebiya Kadeer Trade Center in Xinjiang, affecting Uyghur culture and commerce, prompting criticism from activists amid concerns over cultural erasure and human rights violations.
Demolition of a Cultural Landmark
The Chinese government recently demolished the Rebiya Kadeer Trade Center in Urumqi, Xinjiang, a vital hub for Uyghur culture and commerce, as reported by VOA. This center, once inhabited by more than 800 predominantly Uyghur-owned businesses, has been deserted since 2009. Authorities forcibly ordered local business owners to vacate the premises before proceeding with the demolition, which took place without any public notice.
Condemnation from Activists
Uyghur rights activists have condemned this demolition, perceiving it as part of China’s broader strategy to undermine Uyghur identity and heritage. The event has sparked heightened international concern regarding China’s policies in Xinjiang, which have been characterized by allegations of mass detentions and cultural suppression, prompting claims of crimes against humanity.
Rebiya Kadeer’s Response
Rebiya Kadeer, the center’s namesake and a notable Uyghur rights advocate, criticized the demolition as a deliberate attempt to erase her legacy. Kadeer, who has been living in exile in the U.S. since her release from imprisonment in 2005, continues to advocate for Uyghur rights. She has expressed that her family members have suffered persecution due to her activism, while the Chinese government has yet to comment on the legal ramifications of the demolition.
Source : China Demolishes Uyghur Business Landmark in Xinjiang – Shia Waves
China
China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
China’s private pension scheme, previously piloted in 36 cities, will roll out nationwide on December 15, 2024, enabling workers to open tax-deferred accounts. The initiative aims to enhance retirement savings, address aging population challenges, and stimulate financial sector growth.
After a two-year pilot program, China has officially expanded its private pension scheme nationwide. Starting December 15, 2024, workers covered by urban employee basic pension insurance or urban-rural resident basic pension insurance across the country can participate in this supplementary pension scheme. This nationwide rollout represents a significant milestone in China’s efforts to build a comprehensive pension system, addressing the challenges of a rapidly aging population.
On December 12, 2024, the Ministry of Human Resources and Social Security, together with four other departments including the Ministry of Finance, the State Taxation Administration, the Financial Regulatory Administration, and the China Securities Regulatory Commission, announced the nationwide implementation of China’s private pension scheme effective December 15, 2024. The initiative extends eligibility to all workers enrolled in urban employee basic pension insurance or urban-rural resident basic pension insurance.
A notable development is the expansion of tax incentives for private pensions, previously limited to pilot cities, to a national scale. Participants can now enjoy these benefits across China, with government agencies collaborating to ensure seamless implementation and to encourage broad participation through these enhanced incentives.
China first introduced its private pension scheme in November 2022 as a pilot program covering 36 cities and regions, including major hubs like Beijing, Shanghai, Guangzhou, Xi’an, and Chengdu. Under the program, individuals were allowed to open tax-deferred private pension accounts, contributing up to RMB 12,000 (approximately $1,654) annually to invest in a range of retirement products such as bank deposits, mutual funds, commercial pension insurance, and wealth management products.
Read more about China’s private pension pilot program launched two years ago: China Officially Launches New Private Pension Scheme – Who Can Take Part?
The nationwide implementation underscores the Chinese government’s commitment to addressing demographic challenges and promoting economic resilience. By providing tax advantages and expanding access, the scheme aims to incentivize long-term savings and foster greater participation in personal retirement planning.
The reform is expected to catalyze growth in China’s financial and insurance sectors while offering individuals a reliable mechanism to enhance their retirement security.
| This article was first published by China Briefing , which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, and India . Readers may write to info@dezshira.com for more support. |
Read the rest of the original article.
- Gordonstoun Severs Connections with Business Led by Individual Accused of Espionage for China
- China Dismantles Prominent Uyghur Business Landmark in Xinjiang – Shia Waves
- China Expands Nationwide Private Pension Scheme After Two-Year Pilot Program
- How a scandal over sanitary pads is shaping feminist activism in China
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