China and Japan are both aging countries, but what is the difference between these two countries? The biggest difference may be that Japanese gets wealthy before they become old, while Chinese gets old without wealth.
Japan social security expenditure was 31.9 trillion yen in 2016 with more than 3% growth rate for last 8 consecutive years,, accounting for 33% of the country's total budget. Such a high proportion of social security expenditures is unbearable for China.
Although there are many examples of "Elderly Bankruptcy" in Japan, but the Japanese elderly do have a large distributable wealth. In a 2017 report by Tokyo Metropolitan Government, estimates that approximately 1800 trillion yen, 70% of Japan's family financial assets are held by people over the age of 60.
The Ministry of Health, Labor and Welfare (MHLW) of Japan also states that, that per capita saving rate of Japanese residents aged 60-69 is 13.4 million yen (RMB 820,000 ), the group with the most disposable assets in Japanese society. Meanwhile, the per capita savings of residents over 70 years old also reached 12.6 million yen (RMB 770,000).
Mizuho Securities, Japan's largest financial institution, predicts that Japanese seniors hold a total of 11 trillion USD (about RMB 75 trillion) in financial assets. Unlike Chinese who invest in physical assets such as land and real estate, Japanese hold their assets in financial products such as stocks, bonds, trusts, and etc. that can be cashed at any time.
Mizuho intends to aim the wealthy Japanese elderly as their target customer to drive the company's performance. The company has sold 750 trust funds since August 2017. For example, the average age of Mizuho's latest product is 83.6 years old. The company also plan to sell 300 billion yen (2.7 billion USD) elderly trust products in the coming years.
Why does Japan have the phenomenon of "the older the richer"? Apart from the current elderly growth in an era of better economic development, giving them a relatively stable saving rate, another reason that causes them getting richer in old age is related to having property. The Japanese elderly basically doesn't use savings to support their children to buy a house, but support their life in retirement.
According to a survey of the University of Tokyo, 85% of the young married couple in Tokyo are renting a house; 10% of them live in the parental home or company dormitory, and only 5% of them actually buy a house.
China is in a completely different situation compared to Japan. The property almost emptied the savings of the Chinese elderly and over drafted the future of the young. China's national savings rate ranks first in the world given the perception that the Chinese used to save money. China's national savings rate rose from 35% in 1992 to 59% in 2012.
As of May 2017, the total amount of household deposits in China was RMB 62.6 trillion. Although the household deposits have risen month by month, it is noteworthy that domestic household loans have risen from RMB 8.8 trillion in 2010 to RMB 36.4 trillion. The national net deposits remain RMB 26 trillion after subtracting household loans.
The elderly's savings become the important source for the children to buy a house. "China Millennial Generation Consumer Report" by CB Richard Ellis shows that, more than 2/3 of the Chinese millennial have received parental support among the current homeowners. The disposable funds become less as the proportion of medium and long-term loans (mainly mortgages) increases.
The chairman of ICBC Yi Hui Man said, the proportion of household savings to household disposable income fell by nearly half from 25.4% in 2010 to 12.7% in 2017. Meanwhile, household debt as a share of GDP rose from 33% in 2013 to 49% in 2017.
Medium and long-term loans accounted for a large proportion of household loans from the perspective of debt structure, and continued to rise in the past two years, accounting for nearly 80% in 2017.
Furthermore, the household medium and long-term loans including housing provident fund loans were RMB 31 trillion as of July 2017. This figure was only RMB 18 trillion at the beginning of 2015.
To a certain extent, the down payment of the property is short-lived the life savings of the Chinese elderly; and mortgage overdrafts the cash flow of young people for the next 20 or even 30 years.
Final Analysis Conclusion:
Japanese elderly gets wealthy before they become old and didn't have to bear the child's property down payment, make them have a higher level of pension, better silver economy development and socialized pension more systematically.
While Chinese elderly gets old before getting rich, the housing not only empties their savings for a life (an equivalent to weakening social pension), but also the numbers of young people in advance overdraw their income and cash flow for next decades.
