ABSTRACT

People's savings, and especially peasants' savings in rural areas, are a great regulator in the flow and control of currency. This has a profound bearing on the various aspects of our economic life. A good proportion of savings has arisen from the people's desire to improve their own living conditions, their material and cultural livelihood. Because of the total difference in the nature of savings under socialism and under capitalism in Old China, there is also a sharp difference in the effects on the economy. A process of reinvestment and reallocation of resources starts when savings funds begin to accumulate; what originally existed for consumers' purposes is transformed into investment and capital formation. As Chairman Mao pointed out, the people's savings both in the rural and urban areas are one of the main sources of funds which can be tapped for our economic reconstruction.