The trend of saving rather than spending income began during the Covid-19 epidemic, has deepened in China due to the housing market crisis, and is undermining Beijing's efforts to revive the economy.
Young people in Generation Z are doubling down on their savings while continuing to ignore government calls for people to spend, spend, spend, analysts say.
On Instagram in China Little red book or red note As the West knows, many young people under the age of 30 are exchanging opinions on how to spend less on office lunches and shop on the cheap.
See also: Thugs ransack South Korean court after Yoon Changchun arrest
Influencers also share tips for turning financial discipline into a lifestyle. There are more than 1.5 million posts on how to save money and more than 130 million views.
“I think the economy is very bad and it seems like it's hard for everyone to make money, so I think it's important to protect your wallet,” said Ava Su, who joined Alibaba to earn an income after graduating six months ago.
Su, 26, who considers the internet industry “unstable”, said she has cut down on impulse spending and made a long-term plan to save 2 million yuan ($273,512) – 100 times her monthly salary.
Data from Yu'E Bao, a popular online money market fund on the Alipay payment app, shows that users born after 2000 made an average of 20 deposits per month as of the end of 2024, double the number in May.
The May figure was 10% higher than the same period last year. Yu'e Bao also said that the funds in each person's account that month were nearly 3,000 yuan, an increase of 50% compared with the same month last year.
Continued pessimism hurts sales
Some economists warn that as policymakers look to domestic consumption to boost China's gross domestic product, entrenched savings could hollow out demand. Continued pessimism, which has already driven down consumer prices for everything from cars to bubble tea, will also undermine the long-term potential of the world's second-largest economy.
This situation is in stark contrast to the profligate attitude of the so-called “moonlight generation”, a term used to describe people born in the 1980s and 1990s.
Hong Haofeng, a professor of political economy at Johns Hopkins University, said they have only seen the expansion of job opportunities, increase in income and continuous improvement in quality of life, and are known to spend all their wages at the end of each month.
But he added that Covid-19, the economic slowdown and government crackdowns on tech companies and other parts of the private sector have left today's young people feeling they need to prepare for the worst.
“This loss of optimism is the first since (China's) market reforms began in 1978,” Hong said.
High unemployment drives government job growth
This pessimism means many young people are seeking “iron rice bowl” jobs in government departments or state-owned enterprises, which they believe offer more employment security.
Su said she plans to take the civil service exam at some point in the future.
Over the past two years, the unemployment rate among about 100 million Chinese people aged 16-24 has remained high.
Youth unemployment reached a record high of 21.3% in June 2023, prompting officials to stop publishing the data series and “re-evaluate” how the data is compiled. The recalibrated youth unemployment rate in December was 15.7%.
Lily Li, a 26-year-old high school English teacher from Shenzhen who started her latest job in September with a monthly salary of more than 10,000 yuan ($1,364), has saved 80%, drastically reducing spending on non-essentials such as clothes or concert tickets.
She originally aspired to work in the corporate world, but became a school teacher for stability. Lee said she still plans to look for another job within the next two to three years, but is unsure if she will find one.
Unlike the concept of Millennials enjoying life to the fullest, the existential anxiety of China’s Generation Z continues to deepen as the country’s economy stagnates.
Not long ago they said in Chinese “Tang Ping”, or “Lie flat”lamented that society is plagued by “involution,” which refers to being trapped in a meaningless rat race.
These buzzwords emerged with the rise of “mulberry” culture, which celebrates defeatism, and “Buddhist youth,” which refers to young people's indifferent attitude towards life.
“The 'involution' trend could intensify price competition and exacerbate deflation as companies compete for weak demand,” said Gary Ng, senior economist at Natixis in Hong Kong.
“This consumption downgrade may leave a void in products and services in the mid-price range. China's long-term potential growth will slow.
China’s 2024 Gross domestic product grew 5.0%But GDP growth is expected to slow over the next two years, data on Friday showed.
- Reuters Additional editing by Jim Pollard
See also:
China achieves 5% growth target amid public doubts and complaints
China's population declines for third consecutive year
China launches bond financing measures to boost sluggish economy
Biden restricts U.S. companies and allies' access to artificial intelligence chips
US investigation shows China unfairly dominates shipbuilding industry: sources
China plans to issue record $411 billion in bonds in 2025: sources
U.S. announces new investigation into traditional Chinese chips
“Garbage Time”—a new manifestation of China’s economic despair
