In the face of a deteriorating Chinese economy, a shift in spending habits is becoming increasingly evident, particularly among the nation’s youth. These young individuals, navigating through economic turmoil, have adopted a more frugal approach to their expenditures.
They exercise caution with each penny spent, meticulously comparing prices across various platforms and seeking out additional discounts. Their quest for value has led them to frequent modest eateries, where they can satiate their appetites without straining their wallets. This conscious curtailing of expenses is driven by a desire to secure their financial future.
These prudent spenders, aged between 15 and 29, form part of what is known as Generation Z. They represent approximately 18.4% of China’s total population of 1.4 billion. According to recent research studies, this demographic is poised to play a pivotal role in shaping future consumption patterns and child-rearing practices. Their current frugality may well be a sign of the times to come.
Simultaneously grappling with the dual burdens of economic volatility and an aging society, China’s Generation Z finds itself in a precarious position. Despite China’s first-quarter gross domestic product experiencing a 5.3% annual growth, surpassing expectations, the majority of projections indicate a persistent deceleration in the forthcoming years. Compounding this is the unsettling unemployment rate of 15.3% among individuals aged 16 to 24 as of February, a figure that significantly overshadows the national average of 5.3%.
The habits of Generation Z, shaped by these mounting pressures, are poised to influence the trajectory of the world’s second-largest economy for years to come. Terms such as “reverse consumption” and “stingy economy” have emerged as buzzwords on Chinese social media, encapsulating the shift towards a more judicious spending approach among a generation nurtured in a period of swift economic growth and escalating living standards. The term “narcissism” is also gaining popularity, not as a synonym for “selfishness,” but as an affirmation of self-care and self-acceptance, further illustrating the evolving mind set of this generation.
The sense of uncertainties has become so strong among the youths that they have developed a deep sense of doubt and disillusionment about the promise given to them since they were young, said Biao Xiang, an anthropologist researcher on China at Germany’s Max Planck institute.
A study focusing on the habits of Generation Z, conducted by the Chinese social media platform Soul, revealed interesting insights. During the Singles Day shopping festival, it was found that 43.4% of Gen Z users made purchases with a specific intent, and over 30% of them compared prices across various platforms before finalizing their purchase.
Soul, which boasts a user base comprising approximately 80% of Generation Z, has pinpointed frugality and self-love as the defining trends for the year 2024. The study also highlighted other trending terms among Gen Z users, such as “lazy health,” indicating a preference for cost-effective wellness practices like adequate sleep; “city walks,” referring to leisurely city strolls; and “special forces travel,” denoting short, activity-packed trips designed to optimize time and minimize expenditure.
Julienna Law, the managing editor at Jing Daily, a publication specializing in consumer trends, noted the emergence of the “stingy economy.” She observed that cost-saving activities, such as dining at community canteens and shopping at discount snack stores, have gained popularity as effective money-saving strategies.
To save money, Chinese youths have started buying “leftover mystery boxes”. These boxes carry unsold food from restaurants and are often sold on different social media platforms like Xiaohongshu and the WeChat messaging app. By ordering these mystery boxes, many youths are saving 20 to 30 yuan on average. The sluggish Chinese economy has forced them to spend less. Household spending remains sluggish due to a prolonged property market slump, and even retail growth has slowed down. All these factors have shaken the confidence of the people.
It is worth noting that the degradation of consumption has far-reaching ramifications for the economy. For instance, more people are ordering takeaway rather than dining out because it is cheaper and more convenient. This is a warning of a potentially devastating impact on the restaurant sector.The consumption slump could even have geopolitical implications. U.S. Treasury Secretary Janet Yellen earlier this month prodded Beijing to do more to persuade citizens to spend, rather than save, to absorb industrial overcapacity that is flooding global markets.
The transformation in consumer habits is already reshaping markets, leading to the emergence of Pinduoduo, a low-cost sales platform on social media. This has posed a challenge to the market dominator, the Alibaba website. Due to this, a growing preference for local goods has risen among the youths. A study finding shows that 59% favour local brands, while 11.8% still go for foreign ones. All the luxury brands of foreign origin have been warned last month that the Chinese market would “remain difficult” this year because consumers have “become more price-sensitive.”
The use of popular terms, from the ‘lying flat’ resistance to economic stress observed in recent times to the concepts of reverse consumption indicates a generation navigating challenging conditions. During the recent Lunar New Year period, there was a notable increase in the number of young Chinese individuals using home-sharing platforms to book temple stays. The cost of staying for one night, which includes early morning meditation sessions, is a mere 80 yuan.
Chinese policymakers have not been able to figure out how to ensure a good and promising future for the younger generation, the youth of China under the CPC rule lives in limbo.