It’s a question that often pops up when we think about global economics: where are people putting their money? And how does the United States stack up against other major players like Europe and China when it comes to saving?
When you look at the big picture, the numbers can be quite revealing. Projections for 2024 suggest that the US will account for about 16% of global savings, while Europe is expected to hold a slightly larger slice at 18%. This might seem straightforward, but what’s really interesting is how these figures have shifted over time.
Back in the year 2000, the US held a much more dominant position, with its savings making up 27% of the world's total deposits. Europe, at that time, represented about 25%. Fast forward to today, and we see a significant redistribution. The reference material points out that since the 1990s, China's household wealth has seen a dramatic surge. Their share of global deposits has climbed from a mere 5% to a remarkable 28%, comfortably surpassing both Europe and the US.
It’s also worth noting the sheer scale of these economies. In 2023, China's GDP was projected to reach $17.8 trillion, while the US was expected to hit $27 trillion, and Europe around $16.65 trillion. What’s particularly striking is that China's share of global deposits (28%) is considerably larger than its share of global GDP. The US, on the other hand, has a savings proportion that’s smaller than its GDP share, and Europe’s deposit share is only slightly larger than its GDP share.
China, in essence, has become a global savings powerhouse. The figures are quite staggering. By the end of 2023, China's RMB savings were anticipated to reach 284.26 trillion, a 10% increase year-on-year. Resident savings alone hit a record 16.67 trillion. Even more telling, savings balances have now surpassed the nation's GDP, reaching 137 trillion. Between early 2020 and January 2024, Chinese residents added an estimated 58.24 trillion RMB in new savings, with a significant portion of that, 17.84 trillion RMB, being a record-breaking increase within the current year.
This high propensity to save isn't new for Chinese households. International Monetary Fund data from 2018 showed Chinese household savings rates at a robust 36.8%, compared to the global average of 21.5%. Today, that figure is around 38%. To put that in perspective, Germany and the UK hover around 10%, and the US savings rate is a mere 3%.
This high domestic savings rate in China is often seen as a strong indicator of future economic development and consumer potential. For the US, the situation is quite different. The reference material suggests a sharp decline in the US savings rate, from 35% in 2020 to the current 3%—only slightly higher than during the 2008 financial crisis. This rapid depletion is attributed, in part, to the consumption of funds accumulated through measures like COVID-19 stimulus packages. As these funds dwindle, the US savings rate is expected to continue its downward trend, which in turn is slowing down consumer spending growth. Personal consumption in the US grew by only 2.2% in 2023, a noticeable dip from 2.5% in 2022 and a significant drop from 8.4% in 2021. The reliance on credit, as hinted at by the mention of credit cards, likely plays a role in this dynamic.
