Contrary to the world, Chinese Gen Z races to save

Saving is becoming a trend on Chinese social media, where young people set strict monthly savings goals. “Little Zhai Zhai,” a 26-year-old internet user, documents her efforts to keep her monthly living expenses to just 300 yuan ($41.20). She also recently posted a video of herself spending 10 yuan ($1.38) on food.

Since last year, young Chinese have started a trend of buying 1-gram “golden beans” for 400-600 yuan. Many people said they usually buy one or two beans a month, equivalent to the cost of drinking milk tea.

In addition to simple savings, this is a long-term investment for young people. Traditionally, middle-aged and elderly people buy the most gold, but now Gen Z (born 1997-2012) is the customer group attracted to these products.

Other young people cut back by finding “saving buddies” on social media. They form a group and make sure everyone sticks to their goals. One way to save is to go to a community cafeteria, usually for the elderly, where meals are sold at relatively low prices.

“Young Chinese people are having a compensatory savings mentality. They are starting to save more, unlike young people in the 2010s – who often spent more than they earned, and borrowed money to buy luxury items like Gucci bags or iPhones,” said Shaun Rein – Director of China Market Research Group.

Many new terms have also become trendy on social media, such as “reverse spending” and “frugal economy”. Their meaning is to make efforts to cut spending and look for discounts and promotions when shopping.

The latest report from the People’s Bank of China shows that total household savings in yuan increased by 11.8 percent in the first quarter compared to the same period last year.

This is in contrast to the consumption trends of young people around the world, when the wave of “compensation shopping” appeared everywhere after the pandemic. A survey by Bank of America in May showed that Gen Z also took out debt to travel. Intuit’s Wealth Report also showed that instead of saving, 73% of Gen Z in the US said that they prefer a vibrant life to saving and depositing money in the bank.

“Young people probably sense what everyone else does, which is that the economy is not doing very well,” said Christopher Beddor, deputy director for China at Gavekal Dragonomics.

China’s first-quarter GDP grew more than expected, rising 5.3% from a year earlier. But forecasts are still tilted toward a slowdown. The International Monetary Fund (IMF) expects the world’s second-largest economy to grow 4.5% next year. The real estate market, which once accounted for more than 20% of the country’s GDP, has been in crisis for the past three years.

The labor market here is also a challenge for young people, experts said on CNBC“It’s true that people are refusing to spend money. For some young people, the reason is simply that they can’t find a job, or they feel that their income is difficult to increase. They have no choice but to spend less,” said Jia Miao, a professor at NYU Shanghai (China).

The unemployment rate among young people aged 16 to 24 in China was 14.2% in May, much higher than the national average of 5%. Although there are no official statistics on monthly salaries of graduates, a survey by research firm MyCOS found that in 2023, the average salary for this group will be 6,000 yuan ($832), up 1% from the previous year.

“The confidence has disappeared among young people. It will take years, if not longer, for them to be able to spend freely again,” said Rein.