Chinese creating social security to increase domestic consumption

[Howard_Roark]

I was reading a Financial Times article last night that said the problem in China is that people save all there money and the reason for this is no social welfare system. I had never heard social security described in this way before but apparently in China, everyone invests in manufacturing etc and saves all there money then doesn't buy anything and thus there is a lack of a domestic market. People save they claim apparently because they have to buy education, healthcare and there is no social security like here for retirement. This is direct disagreement with such libertarians as Jim Rogers and Peter Schiff who admire the asian model.

http://economix.blogs.nytimes.com/2008/12/17/fear-the-reason-the-chinese-save-so-much/

http://www.chinadaily.com.cn/bizchina/2009-01/15/content_7400619.htm

[hugolp]

China will come down because of their big goverment. Saving is the base for prosperity, not consumption.

[Fozz]

So they go from communist to capitalist to Keynesian.

[hugolp]

So they go from communist to capitalist to Keynesian.

It makes sense from the elite point of view:

- Comunism is making the country poor, so they change to capitalism (economically at least).

- Capitalism is making the country very prosperous and they are afraid people will become so weatlhy, that they will loose control, so they change to keynesianism.