One of the interesting things Jonathan Siegel talked about from his Beijing trip was the attitudes Chinese people have to their finances, and to their government:
The Chinese also love and trust their government. Those I met did and statistics appear to agree. 97% of the Chinese people trust their government vs 37.3% in the US. And something unexpected to me—83% of Chinese think their Country is run for the people vs 36.7% in the US.
They are incessant savers. Statistics say greater than 30% of gross earnings is saved (at personal and national level) compared to our negative savings rate. When I asked what my small sample group would do with being gifted a day’s earnings? “Save it.” How about a month’s earnings—wanna buy something? “Nope.” A year’s earnings? Still no takers. Definitely a different twist to what I expected from my Western mindset (buy a new Macbook Pro anyone? just me?).
I asked Jonathan where the numbers in the first paragraph came from and he dug out the post from Robert Shiller which went on to make some other interesting points:
For one thing, although the Chinese don’t elect their leaders, they trust their government more. According to recent World Values Surveys, 96.7% of Chinese expressed confidence in their government, compared to only 37.3% of Americans. Likewise, 83.5% of Chinese thought their country is run for all the people, rather than for a few big interest groups, whereas only 36.7% of Americans thought the same of their country. With this relatively higher trust, China’s government and enterprises are better able to enact and implement strict policies that promote saving and growth.
Moreover, while economic inequality is on the rise in both countries, Chinese and Americans comprehend this very differently. In the US, widely called “the land of opportunity,” the shame of being poor is unbearable, and there are no cultural resources to enable such people to maintain self-esteem, especially when the country is so successful overall. As inequality deepens, many who fall behind struggle to save face, consuming in order to maintain the appearance of success. At the same time, those who rise from low economic status revel in their newfound wealth by engaging in spectacular displays of personal spending.
By contrast, poor people in China mostly view their personal situation as transitional. People still remember the Cultural Revolution and view themselves as survivors of a shared traumatic experience, underpinning a commitment to collective sacrifice in order to rebuild the country. There is no shame in being poor in China if one reflects that one’s children or grandchildren will be wealthy and successful. On the contrary, as in postwar Germany, it is a matter of pride that one is working hard through a difficult situation that will later be remembered as a historic transition.
In the US, one’s income is a dark secret that one might not reveal even to one’s own spouse. In China, people tell each other how much they earn with relative ease. Especially in Chinese villages, people know how their neighbors are faring. Conspicuous consumption becomes less important when people already know your income.