The People’s Bank of China‘s Governor, Zhou Xiaochuan, called for reformation of the country’s social security system in order to reduce savings. Xiaochuan said that the very basic structure of the Chinese society encourages a high rate of savings, while discouraging over-spending. The country’s savings rate is marginally above 40% of GDP, added Xiaochuan. The lack of domestic demand is blamed on its high savings rate. Xiaochuan also called for speeding up reforms in the pension, healthcare and education systems to reduce precautionary savings. The lack of domestic demand has led Chinese companies to concentrate on further increasing its exports.
