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China's young people are 'revenge saving' even as Gen Zers around the world are piling up debt

Post-pandemic revenge spending is still continuing, but in one part of the world there’s something starkly opposite happening — revenge saving.

Rather than splurging on impulsive purchases, China’s young are saving ferociously as the world’s second-largest economy remains in the doldrums.

Revenge saving has become a trend on Chinese social media websites, with Chinese youth setting extreme monthly saving targets.

A 26-year-old with username ‘Little Zhai Zhai’ is detailing her attempt to cap her monthly spending at just 300 Chinese yuan ($41.28) a month, with a recent video showing how she curtailed her daily meal expenses to just 10 yuan ($1.38).

Others are finding “savings partners” on social media. These partners form a savings circle that ensures its members stick with their goals. Savings measures also include dining at community canteens usually for the elderly, where fresh meals are sold at relatively cheap prices.

“Chinese youth have a revenge savings mentality,” said China Market Research Group’s Managing Director Shaun Rein. “Unlike youths in the 2010s who often spent more than they earned and borrowed money to buy fancy items like Gucci handbags and Apple iPhone, young Chinese have started saving more,” he told CNBC.

Other telltale signs of younger Chinese tightening their purse strings are trending buzzwords such as “reverse consumption” and a “stingy economy.” The former refers to making a more conscious effort to cut spending, while the latter connotes actively seeking out discounts and deals when shopping.

This is in stark contrast to a wider trend among the youth, particularly Gen Zers — those born between 1997 and 2012 — who are reportedly financing their expenditures such as travel via debt. According to a Prosperity Index report by Intuit, rather than cutting expenses to boost savings, 73% of Gen Zers in the U.S. said they would rather have a better quality of life than extra money in a bank.
‘No choice’ but to spend less?

So why are Chinese youngsters getting increasingly circumspect with their spending?

“Young people probably sense the same thing that everyone else does: the economy just isn’t doing that well,” said Christopher Beddor, deputy director for China research at Gavekal Dragonomics.

Total RMB deposits by households in the first quarter of 2024 saw an 11.8% year-on-year growth, according to a recent report from the People’s Bank of China.

While China’s first-quarter GDP beat expectations to log a 5.3% year-on-year growth, forecasts still point to a continued slowdown, with the International Monetary Fund seeing a 4.5% growth in 2025.

Compounding the difficulty is a tight labor market that is especially bad for the young people, experts told CNBC.

“People refusing to spend money is a true phenomenon here,” said Jia Miao, an assistant professor at NYU Shanghai. “For some of the young people, it’s simply because they cannot find a job or they just found that it is more difficult to increase their income. They have no choice but to spend less money,” she added.

Unemployment rate among youths aged 16 to 24 came in at 14.2% in May, well above the national average of 5%. While there are no official statistics for monthly wages earned by undergraduates, a survey found that the average monthly salary of those with undergraduate degrees earned in 2023 was 6,050 yuan ($832), 1% higher from a year earlier, according to domestic reports compiled by MyCOS research and published on local media .

“Confidence and Animal Spirits have disappeared among the youth. It’ll take years if not longer of a boom market before [they] feel comfortable to revenge spend,” said Rein.

As it has done since the law was passed more than five years ago, the Pentagon is seeking a formal waiver to its obligations under Section 889 of the 2019 National Defense Authorization Act, which barred government agencies from signing contracts with entities that use Huawei components.

Its rationale is that Huawei is so firmly entrenched in the systems of countries where it does business — the company accounts for almost one-third of all telecommunications equipment revenue globally — that finding alternatives would be impossible. Meeting the restrictions to the letter would disrupt the Pentagon’s ability to purchase the vast quantities of medical supplies, drugs, clothing and other types of logistical support the military relies on, officials contend.

UAE Bird Expert wrote: ↑Sat Jul 06, 2024 5:57 pm