Could China’s love of cash be as much about trust as lack of trust?

In Tuesday’s New York Times, Shanghai-based business reporter David Barboza takes a look at the preponderance of cash in Chinese daily life, and suggests that the phenomenon may stem from people’s mistrust of Chinese banks and the Communist Party:  This is a country, after all, where home buyers make down payments with trunks filled with ...

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HUAIBEI, CHINA - APRIL 18: (CHINA OUT) A staff member counts money at a branch of Industrial and Commercial Bank of China Limited (ICBC) on April 18, 2011 in Huaibei, Anhui Province of China. The People's Bank of China (PBOC), the central bank, will raise the required reserve ratio of the country's lenders by 50 basis points from April 21 for the fourth time this year, in the latest effort to curb stubbornly high inflation. (Photo by ChinaFotoPress/Getty Images)

In Tuesday's New York Times, Shanghai-based business reporter David Barboza takes a look at the preponderance of cash in Chinese daily life, and suggests that the phenomenon may stem from people's mistrust of Chinese banks and the Communist Party: 

This is a country, after all, where home buyers make down payments with trunks filled with cash. And big-city law firms have been known to hire armored cars to deliver the cash needed to pay monthly salaries.

For all China's modern trappings - the new superhighways, high-speed rail networks and soaring skyscrapers - analysts say this country still prefers to pay for things the old-fashioned way, with ledgers, bill-counting machines and cold, hard cash.

In Tuesday’s New York Times, Shanghai-based business reporter David Barboza takes a look at the preponderance of cash in Chinese daily life, and suggests that the phenomenon may stem from people’s mistrust of Chinese banks and the Communist Party: 

This is a country, after all, where home buyers make down payments with trunks filled with cash. And big-city law firms have been known to hire armored cars to deliver the cash needed to pay monthly salaries.

For all China’s modern trappings – the new superhighways, high-speed rail networks and soaring skyscrapers – analysts say this country still prefers to pay for things the old-fashioned way, with ledgers, bill-counting machines and cold, hard cash.

Many experts say it is not a refusal to enter the 21st century as much as wariness, of the government toward its citizens and vice versa.

But what if the use of cash also demonstrates trust — that people in China think it’s safe to walk around carrying the equivalent of hundreds or thousands of dollars in cash?

Chinese crime data are unreliable. A September 2012 article published on the People’s Web, the website affiliated with the official newspaper of the Communist Party, the People’s Daily, makes the dubious claim that incidences of eight major crimes — including rape, murder, and robbery — decreased by 9 percent from 2009 to 2010 and 10 percent from 2010 to 2011. In 2009, the U.N. Office on Drugs and Crime found that China’s murder rate was 1.1 per 100,000 people — low (the United States was 5.0 per 100,000), but still much higher than official statistics.

Still, anecdotally at least, and not considering crimes stemming from official corruption, China’s a pretty safe place. Perhaps one reason people keep cash around and not in state-run banks is because they think their neighbors are more trustworthy than the government. 

Isaac Stone Fish is a journalist and senior fellow at the Asia Society’s Center on U.S-China Relations. He was formerly the Asia editor at Foreign Policy Magazine. Twitter: @isaacstonefish
Tag: China

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