China's Gen Z Embraces Frugality Amidst Economic Uncertainty

In China, a growing trend among Generation Z (Gen Z) is intensifying as they opt for a frugal lifestyle over government calls to increase spending.

Influencers and Savings Culture

On social media platforms like Xiaohongshu (RedNote), Gen Zers share tips on cutting expenses, such as reducing office lunches and finding budget-friendly shopping options. Influencers promote financial discipline as a way of life, with posts on saving money garnering millions of views.

Economic Concerns Drive Savings

Economic uncertainty, including a downturn in the property market and concerns over job security, have contributed to the shift toward saving. Ava Su, a recent Alibaba graduate, plans to save 2 million yuan to prepare for potential economic challenges.

Rising Deposits and Account Balances

Data from Yu'e Bao, an online money market fund, shows an increase in the number of deposits and account balances among Gen Z users. As of 2024, they made an average of 20 deposits per month, double the number in May.

Contrast with 'Moonlight' Generation

This frugality is a stark contrast to the spending habits of the "moonlight" generation, who prioritized spending and enjoyed rising incomes and an improving quality of life.

Economic Slowdown and Job Insecurity

The economic slowdown and the government's crackdown on certain industries have instilled a sense of pessimism and the need for financial stability among Gen Z. Many are seeking government or state-owned enterprise jobs with perceived higher job security.

Existential Concerns and Decelerating Growth

Gen Z's frugality is driven not only by economic concerns but also by existential angst and a sense of "tang ping" or "lying flat." This trend could potentially impact economic growth by reducing demand for goods and services.

Long-Term Impact

While saving may be beneficial for Gen Z's financial security, excessive saving could dampen economic growth, particularly in the mid-price range. China's long-term economic potential may face a deceleration as a result.