This paper presents evidence on household savings in urban regions of the Chinese provinces
Sichuan and Liaoning based on data from the State Statistical Bureau's Urban Household Survey for
the late 1980s. In this period the Chinese economy was subject to extensive reforms that resulted in
rapid economic growth followed by extremely high inflation rates in 1988 and 1989. The high
inflation rates gave the households strong motives to switch from financial savings to purchase of
consumer durables, which also appear to be consistent with the structure of the observed data. By
providing empirical evidence on the relative importance of savings by lower, middle and upper
income groups for single-child families and for all households, this study also demonstrates that the
savings decisions depend heavily on the level of household income. Single-child families are
focused, not only because of its growing dominance in the current Chinese society, but also to
control for the effect of demographic disparities.