Chinese households amassed an estimated 2 trillion yuan ($308 billion) in extra savings over the pandemic that theyre unlikely to splurge, bad news for the countrys

uneven economic recovery, according Goldman Sachs Group Inc.

Cash hoarded by consumers in excess of pre-Covid levels is estimated at 2% of gross domestic product and 7% of overall household consumption in 2020, Goldman Sachs economists led by Maggie Wei wrote in a note.

However, the extra savings are unlikely to provide a strong boost to consumption this year as households may have already put the cash in less liquid assets, such as mutual funds and time deposits, the economists said. Urban consumers also made up a bigger portion of the savings, and they have been more reluctant to increase spending than their rural peers, they said.

The savings rate among Chinese households jumped to 33.9% of disposable income by the end of 2020 from around 30% in 2019, Goldman Sachs estimates. Its slowly inched up from below 29% in 2013 due to rising precautionary saving as the social welfare network in the country is still under development, according to the report.

The cash hoard is small compared with the U.S., which the investment bank estimates has excess savings of 11% of GDP. Bloomberg Economics

calculates extra savings globally to be $2.9 trillion, with American households contributing half of that.

Goldman Sachs forecasts Chinas household consumption growth this year and in 2022 to remain below what it would have been without the pandemic. Helped by a low base, the year-on-year growth could reach 13% this year, according to the report.

With assistance by John Liu, and Yujing Liu

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