Chinese Families Are Wealthier than American Families: What a Joke

China’s GDP is only half of that of the U.S. However, according to a June 30 report by the Chengdu Business Daily, a recent survey shows total net assets of Chinese households was valued up to $69.1 trillion in 2010 — 21 percent higher than the total net assets of American households from the same year. One reason is that China’s saving rates are much higher than those of the U.S., and a second reason is that the American housing market collapsed while that of the Chinese soared. The third reason is that the Chinese population is four times that of the United States.

According to the conclusions of this investigation, Chinese families are wealthier than American families! No matter how you look at it, this cannot be further from the truth and seems like a colossal joke.

The execution of a sample based survey is subject to the constraints of the data taken and the analytical model. The sample size of the survey was only 8,438. When divided into 80 county-levels, each county was represented by only a hundred households. With such a scarcity of samples, it would be impossible to reflect the true face of Chinese households. So the conclusions look like they were made by a blind person walking in the dark.

Moreover, even if the value of the total net assets of the households in the survey is credible, calculations based on the total populations of the two nations show that the average Chinese household income is approximately $50,000, while the average net assets of U.S. households is up to $190,000. By contrast, the net assets of a Chinese family are only a quarter of that of an American family, a fact that busts the lie that Chinese families are wealthier than their American counterparts.

The data for net assets refers to total assets minus liabilities. China has a staggering savings rate of 52 percent, of which civilian savings amount to more than a third with the rest being business and governmental savings. Even so, Chinese savings are more than 10 times the U.S. amount. Clearly within the Chinese families’ assets, cash carries a greater weight. The reason behind this might be due to the deficient social security system, causing elderly people to save up out of a necessary concern for retirement, health care and education. By comparison, American families are able to enjoy much superior social benefits, and not only are individuals comfortable with consumerism, but the government also encourages spending.

As for real estate, there are no authoritative data on Chinese family homeownership, but it is generally believed that the percentage is higher than that of the Americans. However, there exists a serious imbalance in Chinese homeownership. There are bigwigs at every turn who own several to dozens of homes, average civilians who own just one home and even people who cannot afford to buy a house. This is just another projection of the huge gulf between the rich and the poor. The upper-class occupies too great a share of social resources. To say that Chinese families are healthier than Americans, perhaps we need to only look at the rich and powerful Chinese bourgeoisie.

Moreover, there is a serious bubble in the Chinese housing market, with housing’s value being far above what normal people can cope with. The dichotomy between needing the capital accrued from three generations to buy a single house in China versus the ability to purchase property after three to five years of work in the U.S. is as drastic as the difference between heaven and hell. In reality, after the outbreak of the financial crisis, U.S. home prices have been dropping year after year with no signs of reversal. Yet Chinese homes have been rising several fold, rapidly rebounding after a brief fall in 2008 credited to the loose monetary policies aimed at stimulating the economy. Although the market is currently under historically stringent regulations, it still hovers around at a high position.

Last year, media estimated that the total property premiums in Beijing surpassed America’s total GDP, and experts hinted that Beijing’s premium is sufficient for “buying America.” “Buying America” and “Chinese families are wealthier than American families” are alike in the sense that they are both absurd and outrageous jokes. On the one hand, this shows that there is a deluded vibe surrounding real estate purchasing, with excessive land and housing prices seriously deviating from the laws of economic development, which suggests that there is need for a return to real values. On the other hand, this underlines the non-professionalism of certain media and experts who cannot face the harshness of reality and can only whitewash the puffed-up economy.

At the present, Chinese families are not as rich as American families. This matter of common sense has been rendered as a joke because of investigations that were not rigorous. After unveiling this farce, the next step should be to close the gap between the families of the two nations, for that would pay respect to the proper trends of economic development, improve social security and actualize the goal of wealth for all people.