China’s situation is unique, but we don’t hear much from the country because the media is not as open as in other parts of the world. Reports suggest that young people in China are not spending as much money as they used to and are in strict savings mode.
This is because the situation in the country has changed, with jobs scarce, wage cuts and, once you lose your job, it becomes difficult to find a new one.
Such threats have beset young people in China since the coronavirus lockdown began, with the economy slowing and the job market sagging.
The younger generation, who were known for their lavish spending a few years ago, are now in savings mode, which is counterproductive for the country as it stops money circulating – it stays in the bank but doesn’t make it to outside businesses.
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This cost-saving mode has forced many Chinese businesses to close, while some are now operating at a loss despite having high hopes for the future.
This strict saving is called “revenge saving.”
Saving money also involves eating at local restaurants, usually catering to seniors, where fresh meals are sold at relatively low prices.
Some people are finding “savings partners” on social media and forming groups to help members reach their savings goals.
CNBC quoted Sean Lane, managing director of the China Market Research Group, as saying, “Young Chinese are saving with a vengeance. Unlike their counterparts in the 2010s, who often spent more than they earned or went into debt to buy luxury items like Gucci handbags and Apple iPhones, young Chinese today are saving more.”
“Confidence and animal spirits have disappeared among young people and it will likely take years, or even longer, of the market boom before young people feel comfortable spending freely again,” said Sean Lane.
While the youngsters scramble for revenge, struggling businesses are simply waiting for the light at the end of the tunnel.