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Snow advises to save less, spend more
By Neil King Jr., James T. Areddy (The Wall Street Journal)
Updated: 2005-10-14 11:45
Yet the government remains concerned that the public is still being far too cautious, and has tried to change that. In 1999, Beijing launched a nationwide program dubbed "holiday economics" -- one-week periods in May and October when factory owners and businesses are encouraged to give their workers time off to shop. Beijing also has sanctioned a range of credit-card programs, including Citibank's joint venture in Shanghai that says it issues around 30,000 cards a month.
Still, personal savings have continued to soar. They hovered at around 5.9 trillion yuan in 1999, but are now around five times that level. In the US, the reality is just the opposite: People save far too little and often spend more than they have.
Mr. Snow and his team are compiling a financial action plan that they intend to put before top Chinese officials during economic talks this weekend. The US wants Beijing to allow foreign securities firms to set up independent subsidiaries in China and to offer a larger array of consumer-finance products. Treasury is also urging the government to open the way for credit-rating services and other measures that improve access to car loans and personal credit cards.
Longer term, the US would like to see China cut the personal income-tax rate and divert more money from the massive fixed-asset investments in buildings and factories toward social programs like pensions and health care.
Mr. Snow's visit to the village of Mulan outside Chengdu clogged the streets with security guards and black sedans, interrupting the very shopping he wants to encourage. But it did spur some investment: In the week before Mr. Snow arrived, city officials painted stair railings and building facades, and paved several streets.
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