Chinese Economy Feels Sting of Younger Generation’s Thrifty Ways

Taking cues from society and social media, young people in China aged 16 to 24 are tucking their money away and going without little luxuries like manicures, high-end makeup and eating out.

Called “koukouzu,” or “the young frugal Chinese,” according to a recent Global Times report, this expanding group is pursuing a thrifty lifestyle and comparing prices against quality, with a tendency toward secondhand merchandise they too can resell. 

“We’ve been mapping consumer behavior here for 16 years and in all of that time this is the most concerned that I’ve seen young consumers,” said Benjamin Cavender, managing director of China Market Research Group, Reuters reported on Sunday (Sept. 18).

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China’s economy took a beating from the country’s strict COVID policy that included continued lockdowns, mass testing and having no active cases. The government’s crackdown on Big Tech firms also had an effect on younger workers, per the Reuters report.

Unemployment among those in China aged 16 to 24 is closing in at 19%, with people employed in some sectors taking pay cuts. The average salary has dropped 1% in 38 major cities, Reuters reported. Retail sales went up 5.4% year on year in August, an improvement from July’s 2.7% increase, but still way off from the pre-pandemic level of more than 7%. 

A quarterly survey from The People’s Bank of China indicated that close to 60% of the respondents in the country said they are now saving more rather than spending. According to Reuters, the pre-pandemic level in 2019 was 45%.

Learn more: Inflation Bites as 13% of US Consumers Spent More Than They Earned in Last Six Months

“Amid the tough job market and strong downward economic pressure, young people’s feelings of insecurity and uncertainty are something they never experienced,” said Zhiwu Chen, chair professor of finance at Hong Kong University Business School.

When China will move away from its zero-COVID policy is unknown. Lawmakers have so far concentrated efforts on infrastructure to stimulate the economy, in addition to subsidies for cars and other types of shopping vouchers. 

China cut interest rates this year as a means of stimulating the economy, the only major economy that went that route. In addition, China’s biggest state-owned banks cut personal deposit rates on Sept. 15 to rally spending over savings.