Lots of Chinese People Are Shaking Their Heads At Financial Meltdown in the U.S.

The China Teaching Web ^ | 9/26/2008 | Robert Vance

[RockyMtnMan]

I’d love to see the price of a home in China as a percentage of income compared to the US. How many Chinese don’t own a car? Bet they or their employers don’t have to buy insurance health or otherwise.

The two countries are not even comparable, they are communists that just began moving out of the third world.

[Da Coyote]

What’s the difference between a corrupt Chineese communist and a democrat?

I don’t know either.

[RipSawyer]

Unfortunately lots of Americans have convinced themselves that debt equates to wealth.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

A year or so ago I had a conversation with a man who told me that he and his wife had totally separate financial lives. Their only meeting point is that he pays certain expenses and she pays the others as agreed. He said this was necessary because when she gets a mailer offering her a fifteen thousand dollar credit line she considers it to be income!

[yldstrk]

My dad who grew up in the European community in China says the Chinese are interested in doing anything for money.........

[Zhang Fei]

If there is one thing that China could teach the US about it would be how to save money...

I think it's partly to do with the consumption of services. The average Chinese doesn't really eat out that often - maybe once or twice a month. The average American eats out every day of the week. The average Chinese doesn't really do things like Starbucks. The average American does Starbucks once a day.

And then there's the casual consumption of consumer durables. The average Chinese doesn't drive a car. The average American might have two cars. The average American's gasoline monthly consumption is the average Chinese's monthly salary.

The average Chinese doesn't have air conditioning. The average American probably has central air and probably can't install window units because of local ordinances forbidding them as eyesores. The average Chinese homeowner who does have an air conditioner probably thinks setting the thermostat to 84 degrees Fahrenheit in the summer is nice and cool. The average American is probably doing 70 degrees Fahrenheit. During the winter, the average Chinese probably thinks 59 degrees Fahrenheit is nice and toasty, whereas the average American thinks 75 degrees is more like it.

The average Chinese also doesn't move away from home at the age of 18, whereas the average American probably does. The average Chinese also stays home with his parents after graduation - the average American doesn't. The list goes on and on.

But the big difference - the difference that sets us and them apart is that we get 1/3 of our incomes taken out as federal and local taxes for massive entitlement programs, and the Chinese don't.

[Zhang Fei]

There’s another reason that the Chinese (and Americans alike) are surprised. They have no knowledge of financial history. We’ve had financial panics every few decades since the founding of the republic. And just about every financial panic involved asset bubble inflation followed by deflation. All involved tons of debt.

[Zhang Fei]

For example, in the city where I live, average apartment go for over 300,000 RMB which at the moment is over 40,000 US. There are plenty of people who spend over a million RMB. The point is, they pay for it in cash.

You definitely live in elevated circles. People I know of have problems saving tens of thousands of yuan, never mind hundreds of thousands. People you know in China might pay cash, but people I know generally use mortgages, unless the sum involved is tens of thousands of yuan - in which case they might borrow money from parents and in-laws. The fact is that it's hard to save any money on a typical monthly household income of 3000 yuan ($400) when everything is so expensive.

[Zhang Fei]

You are comparing China to Central America? When did you go to China last? The 1960’s perhaps?

China is way poorer than Mexico and a lot of Central American countries. That's why so much stuff is made in China, rather than right next door - we don't have to pay the Chinese as much money. Here's a link.

[robertvance]

Agreed on almost all of your points. Don’t you think that the fact that the average Chinese has no need for Starbucks,doesn’t eat out that often, doesn’t have to have 75 degrees to be comfortable (they wear warm clothes instead),etc is a testament to their ability to cut costs and save money because they know they have to?

I am talking about ‘middle class’ Chinese people and not ‘peasants.’ Compared to middle class people in the US (myself included) who ‘buy on demand’ Chinese people seem to have more self control on spending. I know plenty of people here who could easily afford a widescreen TV or afford to take a vacation now and then but they don’t because they were brought up to save money.