The reason for the high level of savings in the rural sector is not frugality; it is survival. Savings are insurance against health and old age, offsetting the rural sector's lack of a social security net.
One senior government official displayed his ignorance of the real situation facing China's rural sector and the poor, when he arrogantly proclaimed:
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Migrant workers and low-income groups save less than rich people, and they will spend more to meet previously unsatisfied needs as their incomes rise.
Impact of a widening wealth gap
Finding Beijing's much trumpeted "400 million Chinese that have been lifted [out of] poverty" is like finding Noah's Ark. China's outward appearance of wealth is questionable.
The Chinese Communist Party (CCP) disclosed that:
... the rural and urban poor have become a bottleneck to domestic demand and has[sic] impaired a safe economic structure.
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World Bank reported:
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About the Author
Arthur Thomas is retired. He has extensive experience in the old Soviet, the new Russia, China, Central Asia and South East Asia.
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