03 September 2010

Lending Money and the Chinese Person


I sometimes watch TVB dramas with my parents and I'm curious about something. In Chinese Drama series how come Chinese people always have massive amounts of cash to loan each other all of the time? I mean they talk about $100,000 HK as if it is nothing? Why is this? I was watching something called virtues of harmony where the woman with the spot on her forehead happened to have $300,000 to loan out how come they have so much cash lying about?


Peter old top,

First of all pray allow me to express dismay at your choice of entertainment. With the possible exceptions of coronation street TVB drama is some of the most insipid compost this side of Stephenie Meyers, and casts no small doubt on the taste and indeed sanity of its viewers.

:: Your fai'ful servant runs from the blog master's wrath ::

Where were we? Oh yes, lending money. We may approach the problem in several ways.

Inprimis, Chinese people do tend to have a higher than average saving rate (China's gross national savings rate hovers in the high 40s to the low 50s, US is around 12% while the world average is around 25%). I am sure you've heard about this. This is due to a combination of culture, lack of financial maturity, lack of a social safety net, financial market penetration and simple stage of social development. This carries over to Hong Kong to a certain extend despite said blighted city having a per capita GDP in the developed nations range. It is therefore probably that Hong Kong people, on average, have a higher percentage of their net worth available in easily convertible assets such as securities, stocks, savings, insurance accounts or last but not least, real estate, as compared to your typical chav with a comparable income.

Secundus, Hong Kong has a nominal GDP of around 30,000 of the shiny ones while your average English bloke pulls away $35,000. The difference is not very large. Taking further into account Hong Kong's income inequality, at a gini index of 53 is some 19 points higher than Britain's 34, one can readily imagine the Hong Kong middle class would have a quite comparable income to that of Britain. Property prices being as they are in Hong Kong, one may also expect a higher percentage of his net worth tied up in property, which of course increases the proportion of liquid asset available to him when put side by side with a chap from Blighty.

Tertius, Chinese people (or at least the version TVB likes to present) has a somewhat greater cultural predilection towards lending money to friends and relatives as a sort of social obligation. It is difficult to find hard data on the matter, but the statement 'if one find oneself int he soup, chaps tend to rally round a tad more in China than in the West' is perhaps not without some degree of truth. Here is a review of a book touching upon the subject, which the intersted reader may find instructive.

Quartus, lazy writing. From your fai'ful servant's memories stretching back to the dawn of time, he vaguely recalls times when he used to peruse the odd TVB drama, casting the eye casually over its presentations every now and then, TVB drama from the late '80s onwards tends to concentrate in a sort of fantasy Hong Kong where everybody is at least lower middle upper class living in their own roomy flat (which may also be a studio limitation) and public housing in which half of Hong Kong's population lives in the real world, is only seen when the plot absolutely mandates it. Kwun Tong and Kwai Chung (old, rather run-downish industrial areas in Hong Kong - think the old Docklands) may as well not exist as far as the average TVB drama hack is concerned. They also tend to the malodrama, and that simply cannot be done without some amount of lending money even unto one's last penny. This is the hack's way of beating characterisation and relationships into you with no very subtle an instrument.

Some concluding remarks:
-Hong Kong people having a fair amount of the shiny ones available is based on fact
-Hong Kong people being willing to lend to close friends and family is somewhat more loosely based on fact
-TVB's lazy writing does the rest without straining suspension of disbelief too much, at least in Hong Kong audiences, due to the aforementioned reasons

Pip pip.
Your fai'ful servant,


  1. The exchange rate....

    Even after years of Bernanke printing USD (2013 jan 14) $100,000 HK is still only $12899.10 USD.

    Plus, people in HK tend to live together and not own cars so while an average US person in their 20s would be paying $1,000 a month for rent and more for utilities and several hundred a month for a car, people in HK could save that money. Of course, the person in HK may blow all that money on their next trip to Macao which is one reason you don't see them retiring early.

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