China’s high household savings reflect old values and new anxieties

My grandmother kept her banknotes under the mattress. Even after savings accounts became common and the money my siblings and I gave her began to accumulate, she still preferred to hide cash away at home. She loved saving and hated spending. I thought of her when China’s leaders again emphasised the need to boost domestic consumption at this year’s “two sessions” meetings.

With exports facing geopolitical headwinds and the property sector struggling, policymakers hope households will become a stronger engine of economic growth. Yet persuading Chinese families to loosen their purse strings is proving harder than expected.

Economists often explain China’s weak consumption through structural factors. Household consumption accounts for less than 40 per cent of gross domestic product, compared with nearly 70 per cent in the United States. High housing prices, rising medical costs, income inequality and a limited social welfare system all encourage households to save rather than spend.

These explanations are valid. But they overlook China’s deep cultural instinct for thrift. For many families, saving is not simply an economic decision. It is a moral habit shaped by history.

Growing up in a workers’ family in Nanjing, I was repeatedly told that one of the greatest Chinese virtues is thrift and frugality (勤俭节约). Nothing was wasted – leftovers reappeared in new dishes the next day; old clothes were mended and worn again. When I began working in a factory as a teenager and bought books or an occasional scarf, my mother would scold me: “Don’t behave like a beggar. Save – there’s tomorrow.” Her generation experienced shortages, political upheaval and uncertain livelihoods. Savings were a protection against life’s unpredictability.

Traditional culture reinforced this instinct. Sayings such as “repair the house before it rains” (未雨绸缪) and “success comes from diligence and thrift; ruin comes from extravagance” ( 成由勤俭败由奢) shaped generations. Even as China grew wealthier, this mentality persists. Chinese households still save roughly one-third of their income, against about 4-6 per cent for American ones.

South China Morning Post