Hi, I tend to think you are right, but does your call for better social security require higher taxes and/other more debt? The problem may be the financial accountants in China’s government and CCP are adverse to debt and raising taxes, thinking it is “irresponsible” to increase social security benefits.
Maybe more effort is needed to explain why China has no reason to fear higher debt and/or more taxes?
It's hard to argue that Chinese levels of saving are 'excessive' when it was those levels of savings that enabled them to survive their economy being shutdown for three years in the name of "dynamic zero covid".
I guess it all depends on your perspective. The Chinese approach to saving, that seems so excessive to us in the West, is a rational response to an environment in which disaster lurks just around the next corner (a state of affairs that long pre-dates the CCP). I feel that a policy prescription that could effectively change this would by necessity have to be the biggest scattergun of all time as it would need to change Chinese politics and the Chinese state fundamentally, and to an extent that it is hard to imagine.
All fair points. But I would still argue that a rapidly aging Chinese society needs far more security than China’s porous safety net provides. Until that occurs, consumer led growth will disappoint. Thanks for taking the time to write.
I don’t disagree with that at all and it probably is the necessary first step, I just don’t believe it will be enough to so fundamentally change the Chinese psyche that they significantly alter their relationship to savings…at least not in less than one generation.
Hi, I tend to think you are right, but does your call for better social security require higher taxes and/other more debt? The problem may be the financial accountants in China’s government and CCP are adverse to debt and raising taxes, thinking it is “irresponsible” to increase social security benefits.
Maybe more effort is needed to explain why China has no reason to fear higher debt and/or more taxes?
It's hard to argue that Chinese levels of saving are 'excessive' when it was those levels of savings that enabled them to survive their economy being shutdown for three years in the name of "dynamic zero covid".
I guess it all depends on your perspective. The Chinese approach to saving, that seems so excessive to us in the West, is a rational response to an environment in which disaster lurks just around the next corner (a state of affairs that long pre-dates the CCP). I feel that a policy prescription that could effectively change this would by necessity have to be the biggest scattergun of all time as it would need to change Chinese politics and the Chinese state fundamentally, and to an extent that it is hard to imagine.
All fair points. But I would still argue that a rapidly aging Chinese society needs far more security than China’s porous safety net provides. Until that occurs, consumer led growth will disappoint. Thanks for taking the time to write.
I don’t disagree with that at all and it probably is the necessary first step, I just don’t believe it will be enough to so fundamentally change the Chinese psyche that they significantly alter their relationship to savings…at least not in less than one generation.