Opinion: Chinese Households’ Financial Dilemma Is a Problem for the Economy

Chinese households are desperately trying to bolster their savings, while also racing to repay loans, indicating that their balance sheets have been impaired and are in urgent need of fixing.

This has been a prominent economic phenomenon in China over the past year and an in-depth analysis may help find the key to reviving the economy.

Let’s start with savings. The balance of Chinese household savings surged by 17.84 trillion yuan ($2.6 trillion), or 17.4% year-on-year, to 120.3 trillion yuan at the end of 2022, logging the fastest annual growth since the 2008 global financial crisis.