This paper uses matched customs and firm-level data from Q1 2002 to Q4 2009 to examine which factors influence corporate saving decisions in China. The study shows that the precautionary motive plays a crucial role in explaining firms’ saving behavior. I first show that a firm’s saving is highly sensitive to its ownership structure. Private firms tend to save more than state-owned enterprise (SOE). This is because when firms with valuable future investment opportunities have limited access to finance, they accumulate precautionary savings. To address endogeneity concerns, difference-in-difference estimations controls for the causal impact of precautionary motives on corporate savings. Strikingly, I find that export firms tend to save more during the recent crisis. This finding challenges the mainstream view that an unexpected negative shock to external demand to the export-oriented industry would cause its savings to drop significantly. One interpretation of the results is that the precautionary motive under financial friction increases corporate propensity to save. The results highlight the importance of developing Chinese financial markets in order to channel savings into investment. One policy implication is that the low dividend payment by SOEs is less important in causing the gap between saving and investment than previous studies have suggested.