Asia

By Shelley Smith

By Megan Murphy, Justin Baer, Francesco Guerrera, Patrick Jenkins, Jeremy Grant, Martin Arnold and Sam Jones

As money floods in, Asia's central banks are finding they cannot have free capital flows, controlled currencies, and moderate interest rates at the same time

Scott Langmack has given more than US$600,000 in unsecured loans to strangers.

"I can reliably get 12 per cent, worst case 9 per cent," said Mr Langmack, 50, a former Microsoft marketing executive who began investing in so-called peer-to-peer lending last year. "I can't find anything that gives me this kind of confidence."

With a rise in US savings putting unbearable pressure on China's low consumption rate, leading to the risk of a collapse in China's ability to export its overcapacity, the question about why Chinese households save so much of their income has become more important than ever.

Everyone seems to know the answer. Chinese households save, many insist, because the Confucian culture encourages saving for the future. Saving is deeply and culturally imbedded in the Chinese psyche.