"China's Excess Savings of 891 Trillion... Potential to Fuel Inflation Through Revenge Spending"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The scale of "excess savings" among Chinese households has reached $720 billion (approximately 891 trillion won), and if this money is released through pent-up consumption, it could become a factor that accelerates global inflation.

According to a recent Bloomberg newsletter, economists at Nomura Securities analyzed Chinese bank account and income data and estimated that Chinese households' excess savings amount to $720 billion.

In a report released on the 19th, Nomura Securities economists Rob Subbaraman and Tsuying To analyzed that the slump in China's real estate market and the sharp rise in youth unemployment motivated Chinese depositors to increase their savings.

Meanwhile, Bloomberg forecasted that the overlap in timing between China's zero-COVID policy repeal and the normalization of economic activities with the People's Bank of China's monetary easing could become a factor intensifying global inflation.

In particular, it is expected that Chinese consumers' pent-up consumption will drive up prices within China, which will result in increased inflationary pressure on U.S. prices due to Chinese imports.

The release of pent-up demand for overseas travel by Chinese people is also seen as one of the factors that could exacerbate global inflation.

Christine Lagarde, President of the European Central Bank, also said at the Davos Forum on the 20th that while strong demand is welcome, the normalization of China's economic activities will "put inflationary pressure on many of us."

This content was produced with the assistance of AI translation services.