Frugal Generation: China’s Young Adults Focus on Saving, Raising Economic Concerns

BEIJING - 22 JAN - In China, a growing trend of frugality among young adults, particularly Gen Z, has taken hold, exacerbated by the pandemic’s economic disruption and a crisis in the property market. Many under-30s, particularly on platforms like Xiaohongshu, are exchanging tips on cutting back on expenses like office lunches and finding ways to shop more economically. Influencers are also contributing, with posts about saving money amassing millions of views. For instance, 26-year-old Ava Su, despite earning a decent salary at Alibaba, is focused on cutting back on impulsive spending and saving for a long-term goal of 2 million yuan, reflecting a wider trend of heightened financial discipline among young Chinese workers.

This new frugality has led to an increase in savings, with users of the popular Yu’e Bao money market fund making an average of 20 deposits per month by the end of 2024, doubling the frequency from earlier in the year. However, economists warn that this entrenched saving culture could undermine domestic demand, which policymakers are hoping will drive China’s GDP growth. This shift in mindset marks a stark contrast to the more free-spending attitudes of the "moonlight" generation, who were known for spending their entire salaries. With job insecurity and a rise in unemployment among young people, many are opting for government or state-owned enterprise jobs, as evidenced by the high youth unemployment rate of 21.3% in 2023. This cautious approach to spending, coupled with existential anxiety, is fueling fears that China’s economic growth may slow in the coming years.