Forget retail therapy; China’s youth are all about wallet wellness.
While much of the world is still caught up in post-COVID “revenge spending”, there’s a completely different trend emerging among China’s youth, particularly Gen Z. Here, a movement towards what’s been coined as “revenge-saving” is gaining momentum.
Unlike the global spree of splurging on travel, dining and luxury goods, young people in China lean heavily towards extreme frugality and financial conservatism. This trend is so significant that these young frugal Chinese proudly identify themselves as “koukouzu” on social media, which translates to “a clan of frugal people”.
In this article, we’ll dive deep into why the Chinese youth is revenge-saving and the broader impacts of this trend on Chinese society.
Economic drivers of revenge-saving
Since the COVID-19 pandemic, China’s economy has faced multiple challenges, including a sluggish recovery, rising youth unemployment and stagnant wages. Recent data highlighted an alarming 17.6% unemployment rate among 16-24-year-olds—far exceeding the national average of 5%. Young people are in a tough spot, so much so that 90% of recent graduates say that they are not holding out for ideal roles; instead, they’re scrambling to secure any available job. This widespread unemployment makes it incredibly difficult for young Chinese to find stable work or climb the career ladder.
As reported by CNBC, despite the lack of official figures for undergraduate wages, research by MyCOS indicates that the average monthly wage for these degree holders was about RMB6,050 (US$832) in 2023, only up 1% from the previous year.
Adding to the economic strain, China’s GDP growth, although better than expected at 5.3% year-on-year in the first quarter, is forecasted to slow down to 4.5% by 2025, according to the International Monetary Fund. With the real estate market also faltering—a sector once considered a safe bet for financial stability—young people face not just limited job prospects but rising housing costs too. Consequently, many are turning to saving as a means to regain some control over their uncertain futures.
Cultural shift toward financial conservatism
There’s a notable cultural shift happening among China’s youth—from a culture of consumerism to one focused on financial security. Today’s Chinese youth are eschewing the flashy status symbols of previous generations, like high-end clothing and electronics. Instead, they are prioritizing long-term financial stability. You can see this shift playing out vividly on social media platforms like Xiaohongshu, where hashtags such as #SavingBattle and #SavingsCheckIn are trending. These platforms foster communities that not only encourage but also hold each other accountable for rigorous saving goals, making thriftiness a collective endeavor.
Shaun Rein, Managing Director of the China Market Research Group, pointed out that, unlike the 2010s when many young Chinese financed their luxury shopping sprees on credit, today’s youth are setting ambitious savings targets. This has given rise to what’s being called the “stingy economy”, where value-seeking, deal-hunting and budget travel like “Special Forces Travel” are becoming the norm.
How China’s revenge-saving compares to global spending trends
When it comes to saving, China is in a league of its own. In 2022, China’s gross national savings rate hit about 46% of its GDP, towering over the global average of 24.61%, and substantially higher than the U.S. savings rate of 18% in 2021, according to the World Population Review.
Meanwhile, in the West, particularly in the U.S. and Europe, the scenario is markedly different despite facing similar economic uncertainties. Over there, consumers continue to indulge in luxury goods and experiences, often funding these expenses with debt. This behavior, sometimes called “doom spending”, embodies a live-for-the-moment philosophy, embracing today’s pleasures despite potential future financial consequences.
Just how extreme is the revenge-saving trend among Chinese youth?
In the realm of saving, there’s typical thriftiness—you know, the kind where it’s okay to treat yourself to a Starbucks coffee every now and then without much impact on your overall saving goals. But then, there’s the intense level of saving that some young Chinese are embracing.
Social media platforms like Xiaohongshu are helping push the boundaries of thriftiness, with users hosting “savings challenges” and “saving circles”. They also proactively share their revenge-saving journeys with others.
For instance, a user named “Little Zhai Zhai” managed to slash her monthly living expenses to just around RMB300 (about US$41), spending less than RMB10 (US$1.38) daily on meals by preparing simple, home-cooked dishes. Other frugal hacks range from wave-perming hair to reducing trips to the barber to buying meals for as little as RMB3 (US$0.42) and even making a year’s supply of shower gel on a budget.
Some methods border on the unconventional. Alice, a fashion blogger, created a savings game where she draws a paper that says how much she wants to save each day. Meanwhile, some young people opt for dining at community canteens usually used by the elderly to cut costs—a choice that might raise some eyebrows.
Even businesses are noting these changes, too. Certain retailers and eateries have started offering “blind food boxes”—mystery boxes filled with assorted food items at discounted prices. These boxes have become popular on platforms like Xiaohongshu, where young users share their budget finds and the thrill of unboxing what’s inside their mystery purchases.
Impacts of revenge-saving in China
The trend of revenge-saving is significantly altering financial behaviors in China, leaving a noticeable mark on the broader economy. In 2022, household savings shot up to RMB17.84 trillion (about US$2.6 trillion), marking an 80% increase from the previous year. This means that nearly one-third of total income was stashed away, up from about one-fifth before the pandemic. Moving into the first quarter of 2024, total RMB deposits by households continued to grow, showing an 11.8% increase year-on-year, as noted by the People’s Bank of China.
This shift towards saving over spending contrasts sharply with China’s usual growth model, which has always relied on robust domestic consumption. The luxury goods market offers a clear example of these changes. Post-pandemic, demand for luxury items in China has plummeted, impacting major brands like Hugo Boss, Burberry, Richemont and Swatch, all of which have reported significant sales declines this year. There’s also a growing trend of “luxury shame” where consumers shy away from flaunting expensive items during economic slowdowns.
Besides luxury goods, many young Chinese are cutting back on spending across entertainment, dining and fashion, opting instead for more economical choices. This behavior could potentially dampen sectors reliant on discretionary spending, signaling a shift in consumer priorities that might have long-lasting effects on industries fueled by consumer indulgence.
On a more personal level, the move towards aggressive saving might alleviate some anxiety about future financial stability, but it also carries a psychological cost. The intense focus on saving can lead to feelings of deprivation and limit social activities, impacting the overall quality of life for those deeply invested in this trend.
Will revenge-saving continue in China?
As the economic recovery in China remains on shaky ground, the trend of revenge-saving is likely to stick around, potentially reshaping consumer behavior and the economic landscape for the foreseeable future. This enduring trend is challenging for the government, which is eager to stimulate spending to fuel economic growth. Analysts believe that a significant economic rebound is likely the only scenario that could shift young people’s current cautious spending habits back towards those of previous, more spendthrift generations.
From a broader viewpoint, revenge-saving reflects a significant change in the financial aspirations of China’s youth. Unlike the previous generations, who were more drawn to consumerism and luxury brands, today’s younger generation prioritizes financial stability and independence. This pivotal shift suggests that businesses aiming to connect with young consumers might need to rethink their strategies. The focus may need to shift towards offering greater value and more affordable products rather than premium, high-cost goods.
Also read:
- 10 Clever Ways to Save Money as a Business Owner
- How to Manage Your Digital Money Better
- 5 Simple Ways to Prepare Your Personal Finances for a Recession
Header Image from Unsplash
