Chinese youth are tightening their wallets

On the social networking platform Xiaohongshu – similar to Instagram, many young Chinese people under 30 years old recently shared experiences on how to save money on office lunches and cheap shopping.

Influencers also share tips for turning financial discipline into a lifestyle. Articles about how to save money reach more than 1.5 million posts with more than 130 million views on the platform.

“I feel like the current economy is quite poor, it seems like it’s hard for everyone to make money. So I think protecting your wallet is important,” said Ava Su, an employee who joined Alibaba more than six years ago. months after graduation, said.

At the age of 26, Su said he has a relatively comfortable salary but sees the Internet industry as “unstable”. She reduced impulsive spending and made long-term plans to save 2 million yuan ($273,512) – 100 times her monthly salary.

Working as a high school English teacher in Shenzhen, Lily Li (26 years old) saves 80% of her salary of more than 10,000 yuan (1,364 USD) per month, significantly cutting down on non-essential expenses such as clothes or watching shifts. music.

Even with fast-moving consumer goods (FMCG), a joint report by consulting firm Bain & Company and market research firm Kantar Worldpanel said sales in China only increased by 0.8% in the first 9 months of 2024 compared to same period in 2023. Consumption volume increases by 4.6% but average selling price decreases by 3.6%.

“We saw the largest decline in average selling price since 2021. Competition is increasingly fierce and demand is growing for truly value-for-money products,” Rachel Lee, General Manager of Kantar Worldpanel China said in July. before.

Meanwhile, data from Yu’e Bao, a popular online money market fund on payment app Alipay, users born after 2000 deposited money into the fund an average of 10 times per month in May/ 2024, an increase of 10% compared to 2023.

The average amount of money in each person’s account that month was nearly 3,000 yuan ($410), up 50% over the same period in 2023. By the end of the year, this group of young users deposited savings into the fund an average of 20 times. every month, it doubles.

Some economists warn that ingrained savings habits could sap demand at a time when policymakers are expecting domestic consumption to boost GDP. Persistent weak sentiment, which has led to falling consumer prices from cars to milk tea, risks undermining the long-term potential of the world’s second-largest economy.

The current situation is in stark contrast to the generous spending attitudes of the so-called “moonlight” generation – those born in the 1980s and 1990s. These people have seen increased job opportunities, income increasingly high and the quality of life is constantly improving. They are famous for spending their entire salary every month, according to professor Ho-fung Hung from Johns Hopkins University.

However, Covid-19, the economic slowdown and the government’s tightening of technology companies and other industries have made today’s young generation feel the need to prepare for the worst. “Such a loss of optimism is the first time since China implemented market reforms in 1978,” Mr. Hung said.

In addition to saving, many young people seek “iron rice bowl” jobs, a term that describes jobs at state agencies or state-owned enterprises, where they believe there is more stability. . Teacher Lily Li just accepted her current job in September 2024. Li once wanted to work in the corporate sector but chose a career as a teacher because of the stability. She still plans to find another job in the next 2-3 years, but is not sure about her chances. Su also plans to take the civil service exam in the future.

Unemployment among China’s roughly 100 million people aged 16-24 has remained high over the past two years. The youth unemployment rate reached a record high of 21.3% in June 2023, causing officials to stop publishing this data to “reevaluate” how to collect the data. After adjustment, the youth unemployment rate last December was 15.7%.

Unlike the fully hedonistic lifestyle of the Millennials generation – born from 1981 to 1996, the existential anxiety of Gen Z – born from 1997 to 2012 – in China is growing. This is a state of anxiety or insecurity related to fundamental questions about the meaning, purpose, and nature of life.

In modern societies, especially among the younger generation Gen Z, existential anxiety is often associated with challenges including economic instability, making them feel uncertain about the future and doubt their ability to control their lives. control your life.

In China, young people talk a lot about the trend of “tang ping” (lying flat), “involution” (a state of being stuck in a meaningless cycle), or “sang culture” (failure culture), even is an indifferent attitude towards life.

“The ‘involution’ trend could increase price competition and spur deflation as companies compete for weaker demand,” said Gary Ng, senior economist at Natixis in Hong Kong. Experts warn that weak consumption could lead to the risk of China’s long-term growth potential slowing down.

Bain & Company and Kantar Worldpanel forecast that the Chinese consumer market is expected to recover by 2025 thanks to Beijing’s proactive fiscal policies and voucher issuance by local governments. However, this recovery will be modest because it takes time for fundamental economic factors to improve and consumer confidence to be restored.

“It takes patience and time for stimulus packages to take full effect, but they have the potential to gradually strengthen consumer confidence, which then translates into higher levels of consumption,” Bruno Lannes , an expert at Bain & Company commented.

China’s GDP in 2024 increases by 5%, according to official data. International forecasts suggest growth will slow this year and 2026.