Why did the savings of ordinary people increase so much this year?

The rich family has no surplus grain 2022-11-18 17:10 published in Zhejiang

The People’s Bank of China has a series of statistics called “Statements of RMB Credit Receipts and Expenditures of deposit-taking financial institutions”.


Among them, the so-called “deposit-taking financial institutions” refers to all kinds of banks; the so-called “RMB credit balance” is actually to count the total amount of RMB deposits and loans.

In this series of data, there is an entry on the “source item”, which is domestic deposits in the household sector, and this figure is the total of all domestic renminbi deposits of the Chinese people — of course, there are non-renminbi deposits, there are offshore deposits and so on, but let’s not talk about that, let’s talk about the increase in renminbi deposits in China.

Looking at the data for the last six years, the number of domestic Yuan deposits in the household sector as a whole has continued to increase, indicating that Chinese people as a whole are undoubtedly getting “richer” in nominal Yuan terms.

Of course, this is not unique to China, this is the norm in any country in the era of credit money, because every year the central bank of every country, printing so much more money, eventually it has to find its way into people’s savings — in fact, the fastest growth in people’s savings is not in China, but in countries like Turkey, Argentina, Venezuela and Zimbabwe.

This also fully shows that the central bank printing money, are for the prosperity of the people.

By September 2022, the total deposit scale of household sector reached 115.7 trillion Yuan, reaching the highest level in history. And the data of October 2022, compared with October 2021, increased by 15.32 trillion Yuan, with a year-on-year growth rate of 15.3%. No matter the total amount, year-on-year increase or growth rate, the highest, the most, the fastest ever.

How can the savings of the common people increase so much and so fast?

What achievement or problem does this indicate?

It’s not hard to guess that the increase in savings must be due to the increase in disposable income, but the best part is that if you look at the disposable income of our people over the past six years, there was no explosive growth in 2022, and even the growth in income was the lowest in decades, only slightly higher than in the first half of 2020 when the epidemic broke out.

Incomes are growing at almost the slowest rate on record, while household savings are rising at a record pace. That’s, that’s, that’s, that’s amazing!

What’s going on?

For ordinary people, disposable income can only go one of two ways:

Consumption, savings

Income growth is the lowest and savings the fastest, which can only mean one thing —

The common people are saving money and food and reducing consumption by a large margin.

A cross-check with consumption data published by the National Bureau of Statistics unsurprisingly confirms our suspicions:

Per capita consumer spending since 2022 has fallen off a cliff, almost to zero compared to the previous decades, and is only slightly higher than in the first and second quarters of 2020 at the beginning of the outbreak.

To put it bluntly, the past three quarters of 2022 have been the winter of consumption for Chinese people.

It is a common understanding that if the people cannot afford to spend; it will be difficult for the economy to grow.

Someone said —

That’s why, with the exception of online shopping and lives streaming, people have no choice but to save money.

The implication is that if China lifts the lockdown on the epidemic, the savings of Chinese people will soon be converted into consumption again, and the whole economic system will start to work again.

This situation is most typical in the United States. During the epidemic from 2020 to 2021, the savings of American residents increased dramatically. On the one hand, this was caused by the containment of the epidemic, and on the other hand, it was more important that the federal government gave a large amount of money to the residents, resulting in the accumulation of a huge amount of excess savings. From mid-2020 until now, the consumer enthusiasm that has sustained the American people has been on a tear…

However, in China, the problem is not so simple.

Zhu He, deputy director of the research department of the China Finance 40 Forum (CF40), did a study in which he compared the per capita consumption expenditure data of the years before the epidemic (2013-2019) with the per capita disposable income data to get a general idea of what percentage of per capita disposable income would have been spent if the epidemic had not been locked down.

The results showed that even if China completely lifted the lockdown in the future, China’s consumption data would not go back to the previous, which he called a “decline in consumption propensity”, for the following reasons:

“The main reason for the increase in the demand for precautionary savings is that the long-term income expectations of the household sector have changed amid increasing economic uncertainties, and it is necessary to maintain a higher level of savings than in the past to cope with various uncertainties.”

In other words, what happened in the United States after the coronavirus lockdown was lifted and consumption continued to support economic growth may not happen in China at all, because there is no “excess savings” brought about by the government’s issuance of money. People have to make careful budget and take precautions against the risk of a slowdown in income growth in the future.

In addition to the increase in epidemic containment and risk prevention deposits, there is another more important reason for the surge in household deposits in China:

The enthusiasm of ordinary people to buy houses is gone!

It should be known that the house purchase expenditure has always been the most important expenditure of ordinary people, and also the most important way to consume their savings. When the enthusiasm of buying a house is no longer, a considerable part of the house purchase expenditure will also be converted into savings.

Because the medium and long-term loans of households all over the country are basically real estate loans, it can be roughly judged from the changes in the data released by the central bank that the enthusiasm of Chinese people for buying houses has been stagnating since 2022, with the growth rate lower and lower compared to the same period last year. This shows that the enthusiasm of ordinary people has gradually dissipated.

I used to buy a house when I had money, but now I don’t want to buy a house even when I have money. The proportion of house purchase expenditure in disposable income has been greatly reduced, and the money saved will be converted into savings?

All right, so to sum up, why the explosion in savings in 2022

1) Containment of the epidemic led to a sharp decline in consumption expenditure;

2) People dare not spend money freely because they need to deal with uncertain risks in the future;

3) The enthusiasm of ordinary people to buy houses slowly dissipates.



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