What’s new: Chinese households saved more and spent less in January as people deposited year-end bonuses with banks.
Household savings increased by 5.41 trillion yuan ($851 billion) in January, about 4 trillion yuan more than the increase in the same period last year and much higher than the average level, data from the central bank showed.
Meanwhile, nonfinancial business deposits decreased by 1.4 trillion yuan. Analysts at CIB Research attributed the increases to year-end bonuses paid to employees ahead of the Lunar New Year.
Continuing pandemic outbreaks and the sluggish housing market have also dampened people’s consumption, said Zhong Zhengsheng, chief economist of Ping An Securities.
A survey by the central bank showed that 51.8% of households preferred to save more during the fourth quarter, 1 percentage point higher than in the previous quarter. The survey also showed that 24.7% of households said they preferred to spend more and 23.5% would invest more.
The background: China has one of the highest savings rates in the world, boosted by higher household income and inadequate social security support which prompts people to put aside more personal savings.
Sluggish consumer spending has weighed on China’s economy during the pandemic. China laid out its “dual circulation strategy” in its 14th Five-Year Plan with an emphasis on self-sufficiency. The strategy aims to rely less on global integration and more on expanding domestic commerce, which requires reorienting the world’s second-largest economy around domestic demand.
Analysts said they expect a further easing of macroeconomic policy to facilitate the flow of new capital into consumption and production in the real economy.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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