If a lot of ppl in China save 60-80%, then why don't they pursue FIRE as well?

[blackomen]

According to this video, savings rates of 60-80% in China are not unheard of:

https://youtu.be/uJFtpnDmYdU?t=332

And yet, FIRE is almost unheard of in that country..

MMM retired early in 7 years on a 50% savings rate..

 is there something I'm missing here?

[Parizade]

According to this video, savings rates of 60-80% in China are not unheard of:

https://youtu.be/uJFtpnDmYdU?t=332

And yet, FIRE is almost unheard of in that country..

MMM retired early in 7 years on a 50% savings rate..

 is there something I'm missing here?

Is FIRE legal in China? It is a communist country, I suspect the state tells you when you can retire.

[SwordGuy]

You are also pre-supposing they **like** the economic conditions they are living in.

[Freedomin5]

FIRE is legal. You’re allowed to apply and interview for jobs and quit when you want. You can switch jobs if you like.

The problem is that the average salary is really low. In Shanghai, which is considered a wealthy city, most of the young people graduating from college make around 5000 rmb per month, which translates to approximately $800 per month. Even when you’re saving 80%, it doesn’t get you very far very quickly. In addition, I don’t think they have index funds here. Most of my friends are either putting the money in high interest bank accounts, which are considered “safe” investments, or else you’re investing in stocks or peer lending. One friend just lost the equivalent of around $20000 USD on a peer to peer lending platform, which isn’t well regulated.  I don’t know if regular folk have access to index funds or mutual funds.

In addition, it’s crazy expensive to buy a house, and if you rent, over the last few years, rent has gone up by 10-20% per year. (it’s finally starting to stabilize, which is nice.) It’s not necessarily a good environment in which to stop working because the future is kind of uncertain.

Also, healthcare is subsidized but it’s not free. You pay out of pocket for treatment. And if you don’t pay, you don’t get treated. They will turn you away at the hospital doors. As long as you don’t die in the hospital property, then they are not liable. I had a friend whose very pregnant and suicidal sister was turned away at the hospital because they deemed her to be too big of a liability. But anyway, the possibility of unforeseen hospital expenses for yourself or extended family members means that in general, able-bodied family members often choose to work to stockpile money in case of emergencies.

Finally, the government does state that you need to work for a certain number of years (I heard it was 15 years) to qualify for the state pension when you retire.

Those are just the financial considerations. I haven’t even started to broach the topic of societal, cultural, and ethical considerations of filial piety, etc. and how those may impact decision to save and decision to FIRE.

[happy]

FIRE is a bit of a Western construct and it assumes a relatively stable and predictable societal future. I don't know about HongKong but if I were from mainland China and I could save 60-80% I'd be grateful and keep on saving because one never knows when one's good fortune might run out.

[blackomen]

FIRE is legal. You’re allowed to apply and interview for jobs and quit when you want. You can switch jobs if you like.

The problem is that the average salary is really low. In Shanghai, which is considered a wealthy city, most of the young people graduating from college make around 5000 rmb per month, which translates to approximately $800 per month. Even when you’re saving 80%, it doesn’t get you very far very quickly. In addition, I don’t think they have index funds here. Most of my friends are either putting the money in high interest bank accounts, which are considered “safe” investments, or else you’re investing in stocks or peer lending. One friend just lost the equivalent of around $20000 USD on a peer to peer lending platform, which isn’t well regulated.  I don’t know if regular folk have access to index funds or mutual funds.

In addition, it’s crazy expensive to buy a house, and if you rent, over the last few years, rent has gone up by 10-20% per year. (it’s finally starting to stabilize, which is nice.) It’s not necessarily a good environment in which to stop working because the future is kind of uncertain.

Also, healthcare is subsidized but it’s not free. You pay out of pocket for treatment. And if you don’t pay, you don’t get treated. They will turn you away at the hospital doors. As long as you don’t die in the hospital property, then they are not liable. I had a friend whose very pregnant and suicidal sister was turned away at the hospital because they deemed her to be too big of a liability. But anyway, the possibility of unforeseen hospital expenses for yourself or extended family members means that in general, able-bodied family members often choose to work to stockpile money in case of emergencies.

Finally, the government does state that you need to work for a certain number of years (I heard it was 15 years) to qualify for the state pension when you retire.

Those are just the financial considerations. I haven’t even started to broach the topic of societal, cultural, and ethical considerations of filial piety, etc. and how those may impact decision to save and decision to FIRE.

I've always thought the relatively high ratio of housing costs to incomes might play a part since you may need to save 60-80% to even have a chance of saving enough for a down payment.

I'm not sure if filial piety is a barrier..  in fact, I'd argue that FIRE may make it easier to achieve your filial piety obligations since you can retire early and take care of your elderly parents in the time that's freed.

Yeah, lack of index funds is a real issue.  I used to work for a Chinese company that managed several hedge funds and one they were proposing was a really simple and low maintenance hedge fund for Chinese nationals who wanted do index investing in US ETFs (akin to DFA, 60/40, permanent portfolio, etc.)

[John Galt incarnate!]

FIRE is legal. You’re allowed to apply and interview for jobs and quit when you want. You can switch jobs if you like.

The problem is that the average salary is really low. In Shanghai, which is considered a wealthy city, most of the young people graduating from college make around 5000 rmb per month, which translates to approximately $800 per month. Even when you’re saving 80%, it doesn’t get you very far very quickly. In addition, I don’t think they have index funds here. Most of my friends are either putting the money in high interest bank accounts, which are considered “safe” investments, or else you’re investing in stocks or peer lending. One friend just lost the equivalent of around $20000 USD on a peer to peer lending platform, which isn’t well regulated.  I don’t know if regular folk have access to index funds or mutual funds.

In addition, it’s crazy expensive to buy a house, and if you rent, over the last few years, rent has gone up by 10-20% per year. (it’s finally starting to stabilize, which is nice.) It’s not necessarily a good environment in which to stop working because the future is kind of uncertain.

Also, healthcare is subsidized but it’s not free. You pay out of pocket for treatment. And if you don’t pay, you don’t get treated. They will turn you away at the hospital doors. As long as you don’t die in the hospital property, then they are not liable. I had a friend whose very pregnant and suicidal sister was turned away at the hospital because they deemed her to be too big of a liability. But anyway, the possibility of unforeseen hospital expenses for yourself or extended family members means that in general, able-bodied family members often choose to work to stockpile money in case of emergencies.

Finally, the government does state that you need to work for a certain number of years (I heard it was 15 years) to qualify for the state pension when you retire.

Those are just the financial considerations. I haven’t even started to broach the topic of societal, cultural, and ethical considerations of filial piety, etc. and how those may impact decision to save and decision to FIRE.

Oh how I long to live in a communist paradise!

Especially China, where the benevolent rulers revere the right of assembly and free speech.

[MrThatsDifferent]

FIRE is legal. You’re allowed to apply and interview for jobs and quit when you want. You can switch jobs if you like.

The problem is that the average salary is really low. In Shanghai, which is considered a wealthy city, most of the young people graduating from college make around 5000 rmb per month, which translates to approximately $800 per month. Even when you’re saving 80%, it doesn’t get you very far very quickly. In addition, I don’t think they have index funds here. Most of my friends are either putting the money in high interest bank accounts, which are considered “safe” investments, or else you’re investing in stocks or peer lending. One friend just lost the equivalent of around $20000 USD on a peer to peer lending platform, which isn’t well regulated.  I don’t know if regular folk have access to index funds or mutual funds.

In addition, it’s crazy expensive to buy a house, and if you rent, over the last few years, rent has gone up by 10-20% per year. (it’s finally starting to stabilize, which is nice.) It’s not necessarily a good environment in which to stop working because the future is kind of uncertain.

Also, healthcare is subsidized but it’s not free. You pay out of pocket for treatment. And if you don’t pay, you don’t get treated. They will turn you away at the hospital doors. As long as you don’t die in the hospital property, then they are not liable. I had a friend whose very pregnant and suicidal sister was turned away at the hospital because they deemed her to be too big of a liability. But anyway, the possibility of unforeseen hospital expenses for yourself or extended family members means that in general, able-bodied family members often choose to work to stockpile money in case of emergencies.

Finally, the government does state that you need to work for a certain number of years (I heard it was 15 years) to qualify for the state pension when you retire.

Those are just the financial considerations. I haven’t even started to broach the topic of societal, cultural, and ethical considerations of filial piety, etc. and how those may impact decision to save and decision to FIRE.

Oh how I long to live in a communist paradise!

Especially China, where the benevolent rulers revere the right of assembly and free speech.

What an odd comment. I wonder if the Chinese are posting sarcastic things about the US and freedom while showing people in detention centers?

Anyways, Freedomin5 offered an on the point perspective to answer OP’s question. China is an amazing and complex and vast country. I’ve loved my visits, which were illuminating on several levels. One thing to look at is FIRE is linked to this concept of freedom, which is a strongly Western, particularly American ideal. That’s not necessarily a strong cultural value for other societies. Some other societies value work, just not for self but for the family and extended family. Look at all of the advice to people here who question using their money for friends and family, the general consensus is don’t do that. Well those ideals wouldn’t be present in Chinese, most Asian, South American or Middle East societies.

[koshtra]

Yeah, the other thing is that the context here is pervasive poverty. Your goal isn't just to support yourself, it's to pull your whole damn family up. You're not saving your money in order to have a good time. China has made extraordinary progress, but it's still, by our standards, really, really poor.

[Kazyan]

I don't know a darn thing about living in China or what the culture is like, since I haven't been there, but achieving FIRE means that you live on dividends, right? Communism defines economic classes by their relationship to capital, and a person supported by FIRE would count as petite bourgeoisie rather than proletariat. Communism doesn't like that (though it's way more concerned with full-on bourgeoisie), so the idea of FIRE isn't likely to have as warm a reception over there as it is in the West.

[Freedomin5]

Yeah, the other thing is that the context here is pervasive poverty. Your goal isn't just to support yourself, it's to pull your whole damn family up. You're not saving your money in order to have a good time. China has made extraordinary progress, but it's still, by our standards, really, really poor.

You’re not expected to just pull up yourself or your family, you’re expected to contribute to the society and pull up the country. One of the tenets (which are often posted on buses and random walls as you walk down the street) is “hard work”.

Now, there is often a disconnect between the philosophical ideals and reality, but it still permeates the culture and you see it come out sometimes in people’s comments on how one should live their life. And filial piety does mean that typically, the child (son) needs to work to provide for extended family, and the daughter needs to work and to marry well to provide for the family. If they have kids, they also need to save up for a dowry (for daughters) and to help their son buy a house so that someone will be willing to marry him when he is of marriageable age. One of our friends’ MIL hates him because he “doesn’t earn enough”. His pay is not shabby and is around quadruple his MIL’s pension, but because it’s not enough to buy an apartment in Shanghai, then he is not taking proper care of his family including his wife and his wife’s parents. With thinking like that, many young people do not see “retiring early” as a desirable goal.

The people here that I’ve met who look like they’re FIRE’d are those who built successful businesses that are now run by others. Or they got in early into the housing market and own several rentals — I’ve never quite figured out that one because technically, each person/couple are only allowed to own one apartment. Legally, you’re not allowed to purchase more than one. So I’m not sure how they get around that rule, but somehow they do.

[GuitarStv]

I thought the Chinese government pursued a policy of high inflation to keep their manufacturing sector competitive?  That's good for keeping people busy working, but bad for FIRE,

[flyingaway]

First, most young Chinese do not (cannot) save60~80% of their income, they probably just get things going.
Second, they do not have reliable investment opportunities.
Third, most houses (actually apartments) are not affordable for young people. They buy one on mortgage with savings from their employers. So they cannot retire.

On the other hand, the official retirement age in China is 50 for women, and 60 for men. So there are a lot of women who are FIREd. 

[Radagast]

I expect the dowry thing is a very important item. Women are a rare commodity in China to the extent that the family of a boy will start saving literally at birth to make a payment for house, car, and cash to give him a fighting chance on the reproductive scene. Landing a mate at all pretty much takes a $100k house, a used Chinese brand car, and $10k cash plus copious money blown wooing in a backwater town. A desirable woman in a better city could take 10x that for each of those. This on median monthly salaries of let’s say $800 and $2k. Housing in first tier Chinese cities is in the cost ballpark of VHCOL western cities but even second tier cities are getting very expensive  People will absolutely live in (relative to wealthy nations) poverty to afford a showpiece house and car a few years later. Eg five families in Beijing sharing a flat with five bedrooms and a single kitchen and bathroom none particularly clean. But saving to send family to study in England, supporting parents, upkeep on a nice house back in the village, etc.

[marty998]

I expect the dowry thing is a very important item. Women are a rare commodity in China to the extent that the family of a boy will start saving literally at birth to make a payment for house, car, and cash to give him a fighting chance on the reproductive scene. Landing a mate at all pretty much takes a $100k house, a used Chinese brand car, and $10k cash plus copious money blown wooing in a backwater town. A desirable woman in a better city could take 10x that for each of those. This on median monthly salaries of let’s say $800 and $2k.

Goes to prove we are still equivalent in evolutionary terms with Bowerbirds....

[BlueHouse]

I highly recommend taking a look at DollarStreet.org

https://www.gapminder.org/dollar-street/matrix?thing=Homes&countries=China,United%20States&lowIncome=16&highIncome=10810&activeHouse=31


You can filter by country and income to get a realistic picture of how real people actually live on different incomes.  The wealth disparities in china are as great as they are in the United States.  In this link, I preselected China and US for comparison.