When you read something disparaging or criticizing another individual or a country such as China or one of its BRICS partners, you may see something like the question Troy Parfitt recently asked in a comment on this blog: “What about China’s debt problem?” The immediate thought after reading Parfitt’s entire comment might be that China has a debt problem that will slow or stop its economic progress leading to a crises.
In fact, few readers dropping by for the average thirty seconds to read a blog post will take the time to find out the facts to see if the claims of critics are as bad as they sound.
The result is that individuals motivated by cultural biases that resort to using confirmation bias in what they write will often leave behind a negative image of the subject they have criticized.
A cultural bias is the phenomenon of interpreting and judging phenomena by standards inherent to one’s own culture, and confirmation bias is a method used to support this.
Confirmation bias (also called confirmatory bias, my side bias or verification bias) is a tendency for people to favor information that confirms their preconceptions or hypotheses regardless of whether the information is true. As a result, people gather evidence and recall information from memory selectively, and interpret it in a biased way.
Another example of country’s economic health may be found in the spending and saving habits of its households. Canada’s household savings rate in 2008 was 3.8%, the United States was 2.7%, the EU total was 5.8%, the Russian Federation was 12.6% in 2005, Germany’s household saving rate was 11.2%, Greece was a minus -7.3% in 2006, and the United Kingdom was a minus – 4.5%. Source: Global Finance magazine
For a comparison between China and the WEST, I discovered a paper from the Congressional Budget Office, Washington D.C. titled, “Why Is China’s Saving Rate so High? A Comparative Study of Cross-Country Panel (November 2010)
On page 45, Table 1, the GDP per Capita and National Saving Rate (annual average) for China was 54.4% up from 35.6% in 1980-1990. Wow! More than fifty-four percent saved (annual average) out of what a family earns!
On page 43, Figure 6, there was a chart comparing the saving rates of China with the United States. In 1980, the US saving rate was about 12.4% but by 2008, it was down to almost 5%. By comparison, China’s household saving rate was closer to 15% in 1980 and climbed from there to about 30% by 2008. After the 2008 global financial crises rolled across the globe from New York, the household saving rate in China jumped allmost 20%. Talk about saving for a rainy day!
If a financial crises is coming to China, that household saving rate tells us that the average Chinese family is getting ready to survive it.
Before ending this series, there are more economic facts and comparisons to consider in The Economic Health of BRICS – Part 7 on January 17, 2012, or Return to Part 5
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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.
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