“Revenge Savings”: New Trend Makes China’s Youth Save Extremely

Young Chinese are more cautious when spending money. The time of luxury purchases on credit is over – saving like crazy is the new motto of Generation Z. Just 40 euros per month is enough for young people in China to survive.

Special offers instead of luxury items, cooking yourself instead of ordering food, instant powder instead of filter coffee. The time of uninhibited spending after the pandemic, of revenge spending, seems to be over, at least in China.

However, a new trend is spreading among Chinese young people: Revenge saving. They try to save as much money as possible.

The economy of the world’s second largest economy is weakening. In the second quarter, gross domestic product grew by only 4.7 percent, the lowest rate since the beginning of 2023. In the country’s first three months, Chinese GDP grew by 5.3 percent. “The government hoped that normality would return after China ended the strict measures. And that still hasn’t happened,” says Max Zenglein, chief economist at the Mercator Institute for China Studies, at ntv.

Youth unemployment at record high

The People’s Republic is struggling with a real estate crisis, consumption is weak and youth unemployment is extremely high. 18.8 percent of 16 to 24 year olds did not have a job in August. That wasn’t as many as a year ago, when youth unemployment rose to a record 21.3 percent in June. But still significantly more than in July and the highest level since the beginning of the year. And there are probably many more unemployed, because China’s authorities omit numbers from the statistics: only the young unemployed in the cities are recorded. Full-time students are now no longer counted as unemployed.

Unemployment is particularly high among graduates of universities, vocational and technical colleges: in 2022 they will have it 70 percent of unemployed young people. Two decades ago the number was 9 percent.

The main reason for the increase is that during the traditional graduation season, many more university graduates enter the labor market than there are jobs, said the spokeswoman for the national statistics office NBS. General employment pressure continues. Both job seekers and employers face difficulties.

Xi wants to create more jobs

Around twelve million students graduated in China this summer – a record. But your certificate is not a ticket to a good job. They are all flooding the labor market, but many cannot find work, even though they are well trained. Just under half one of them had a job offer in the spring.

One reason is the weakening economy. In addition, many Chinese companies do not match the applicants’ qualifications. For example, there are more and more humanities scholars – but actually we need them Specialists in other areas.

Youth unemployment is such an urgent problem that President Xi Jinping is addressing it “highest priority” explained. In a speech to the Chinese Communist Party’s Politburo in May, Xi specifically mentioned college graduates, saying that “more jobs need to be created for them so that they can apply what they have learned and what they are skilled at.”

University graduates deliver food

If you find work, the salary is barely enough to live on. In large cities such as Shanghai and Beijing, young professionals with a university degree earn the equivalent of around 670 euros per month. The majority of it goes towards rent. Approximately 360 euros On average, a person in Shanghai has to spend on this per month, according to figures from the Chinese investment bank Guotai Junan Securities from 2019. Those who cannot afford this still live with their parents.

Many graduates have to settle for less qualified jobs and therefore lower salaries. A young man who graduated from college this year told the China ObserverSince then, he has sent out hundreds of applications and completed countless interviews – all without success. Today he delivers groceries. “I thought graduating meant a diploma, instead it felt like an unemployment certificate. Now I’m desperate for a job. And my parents are constantly pushing me to find work. I chose grocery delivery to temporarily relieve my stress.”

There are too few jobs in China, wages are low – the future prospects are uncertain. Hopes for an economic recovery have faded. “It’s impossible to ignore the pessimism of the younger generation. The feeling that whatever they do doesn’t matter as their country ages, inequality grows and economic forecasts are sobering,” says University of Michigan sociologist Yun Zhou at ntv.

Cooking for one euro

That’s why it’s no wonder that saving is a big trend on China’s social networks. Young Chinese are trying to undercut each other when it comes to spending. For example, you cook yourself instead of ordering food from a delivery service. In groups, they give each other savings tips.

A 26-year-old user uploads videos in which she shows how you can survive on the equivalent of around one euro per day. She cooks instant noodles or pure vegetables in it. So she manages to get by on just under 40 euros a month.

Others now split the restaurant bill with friends instead of inviting them, buy cheaper local brands instead of well-known names and use second-hand books instead of new ones.

Savings coupons and Price comparisons

More and more young people are also discovering the community canteens for themselves. You can get a complete, fresh meal there for around 2.50 euros. In recent years, many cities have opened such canteens with government support, actually for old people. They make up an increasingly large proportion of the Chinese population. But now the “senior citizens’ canteens” are also visited by young people.

And when shopping, young Chinese people behave more like pensioners: use apps for vouchers, compare prices via social media and pay with cash instead of using a smartphone.

“The young Chinese generation is spending less. This trend started in 2020 and after Covid-19. The main reason is that people have less and less income,” says Monash University economics professor He-Ling Shi at the Asian news network CNA together.

Luxury brands are selling less in China

Luxury brands are also noticing that people in China prefer to save their money rather than spend it: Sales at Hugo Boss, Burberry, Richemont and Swatch collapsed in July.

Those who have money in China actually like to show it off with expensive cars and bags, according to economic expert He-Ling Shi. “The next generation is not so lucky. They will change their consumer behavior because they have no money.”

Things were different in the 2010s: young people often spent more than they earned and even borrowed money to buy Gucci handbags or iPhones, said China Market Research Group boss Shaun Rein. CNBC said.

Saving for retirement

Overall, the Chinese are saving more and more. Private households have loudly Figures from the People’s Bank of China 18.6 trillion euros had accumulated in their accounts by June – a record amount. Gold is also trendy as an investment. This had recently driven up gold prices.

“We found that households, especially younger ones, are trying to hold more liquidity. This means they want to hold more cash instead of consuming,” said Hang Seng Bank chief economist Wang Dan CNA. Over the past 45 years of opening-up reforms, people have tended to consume more. But after the Corona crisis, the feeling of uncertainty is increasing. “The economic outlook is not getting any brighter.”

Saving not only creates financial reserves, but also gives a feeling of security to be prepared for unforeseen events. For example, in old age: Whether young people will ever receive a pension later is anyone’s guess. China is aging so quickly that by 2035, 400 million people will be over 60 years old – more than the population of the USA. This is a major burden on the underfunded pension system. State pension money will run out over the next decade, the Chinese Academy of Social Sciences has predicted. This could explain why many young people are currently trying to save as much money as possible for a rainy day.