Forced to stay at home by stringent zero-COVID lockdowns, Chinese stashed $3.9 trillion in bank deposits last year. While many economists are pinning their hopes for a global recovery on a “revenge spending” spree by Chinese consumers, the increase in savings largely reflects economic uncertainty, rather than pent-up demand.
SHANGHAI – Chinese bank deposits increased by CN¥26.3 trillion ($3.9 trillion) last year, according to recent data from China’s central bank, the People’s Bank of China (PBOC). Spurred by China’s rigid COVID-19 containment strategy, which the government rolled back in December, household savings surged by CN¥17.8 trillion in 2022, growing by more than CN¥5 trillion in the last two months of the year alone.
To many Western economists and analysts, these so called “excess savings” represent pent-up demand that could lead to a wave of “revenge spending” this year and drive the global economic recovery. But while China is expected to experience a recovery in consumption this year, Chinese households will likely maintain a higher level of precautionary savings over the long term.
To be sure, the increase in Chinese household savings last year is unusual and reflects consumers’ inability to spend as a result of China’s strict zero-COVID lockdowns, which forced millions to remain indoors, sometimes for months at a time. Now that China has abandoned the policy, the floodgates have opened, and it stands to reason that much of these forced savings would spill out, lifting consumption higher.
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SHANGHAI – Chinese bank deposits increased by CN¥26.3 trillion ($3.9 trillion) last year, according to recent data from China’s central bank, the People’s Bank of China (PBOC). Spurred by China’s rigid COVID-19 containment strategy, which the government rolled back in December, household savings surged by CN¥17.8 trillion in 2022, growing by more than CN¥5 trillion in the last two months of the year alone.
To many Western economists and analysts, these so called “excess savings” represent pent-up demand that could lead to a wave of “revenge spending” this year and drive the global economic recovery. But while China is expected to experience a recovery in consumption this year, Chinese households will likely maintain a higher level of precautionary savings over the long term.
To be sure, the increase in Chinese household savings last year is unusual and reflects consumers’ inability to spend as a result of China’s strict zero-COVID lockdowns, which forced millions to remain indoors, sometimes for months at a time. Now that China has abandoned the policy, the floodgates have opened, and it stands to reason that much of these forced savings would spill out, lifting consumption higher.
To continue reading, register now.
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