Urban Chinese households save much more than American counterparts, a new research has found.
University of Missouri Assistant Professor Rui Yao said the difference in savings occurred due to different saving motives in both countries.
"Saving is one of the critical tools that households utilize to achieve financial goals and to improve financial well-being. By looking at saving motives for households in each country, we hope to explain the difference in saving rates across these two countries," Yao said.
Yao took into account three common savings motives- precautionary, education and retirement, to conduct his study.
The research has also found that nearly 60 percent of Chinese households save for precautionary reasons, while only 35 percent of American households have similar saving motives.bout 59 percent of Chinese urban households save for education, such as college tuition, while only 19 percent of Americans save for education motives.
According to Yao, cultural and economic differences between both countries led to variations in saving motives.
"In the U.S., unemployment insurance and other welfare programs provide a relatively sound safety net, whereas in China, there are no such social-welfare programs," Yao said.
"As a result, Chinese households must resort to family support or previous savings in the case of an emergency. Also, the Chinese culture, which is influenced by Confucianism, values education very highly. Recent Chinese economic reforms have shifted education costs to households, which gives them additional motive for education saving," he added.