CHINA: The pandemic and the ongoing crisis in China’s property market have caused economic disruptions. However, a notable trend has emerged among Gen Z—frugality. Once expected to be carefree spenders, this generation doubles down on saving. While the Chinese government urges citizens to spend to stimulate the economy, young people turn to thriftiness, reshaping their financial habits for a more uncertain future.
A digital revolution in saving
According to an article published by Finance Yahoo, the frugal trend among China’s under-30s is driven mainly by social media platforms like Xiaohongshu (RedNote in the West), where influencers and everyday users share practical tips on saving money. With posts on budgeting and cost-saving strategies receiving millions of views, a culture of financial discipline has taken hold. Young people are discussing everything from cutting back on daily office lunches to finding the best deals while shopping.
One such individual, Ava Su, a 26-year-old recent graduate who now works at Alibaba, shared her perspective. She feels that the economy is terrible, and it seems complicated for everyone to make money, so she thinks protecting her wallet is essential. Su, who earns a relatively comfortable salary, has adopted a long-term saving strategy, aiming to save up to 2 million yuan—100 times her monthly income.
This shift in behaviour is also reflected in the rise of digital finance tools. According to data from Yu’e Bao, a popular online money market fund on Alipay, young people born after 2000 now make an average of 20 monthly deposits—double the number recorded just a few months prior. This change highlights a growing tendency among Gen Z to focus on saving and investment, particularly during economic uncertainty.
A generational divide — from ‘moonlight’ to ‘iron rice bowl’
The current saving habits of China’s Gen Z stand in stark contrast to those of previous generations. The so-called “moonlight” generation, which includes people born in the 1980s and 1990s, was characterized by a carefree attitude towards spending. These individuals, enjoying expanding job opportunities and rising incomes, often spend their entire salaries by the end of each month. But the rapid economic changes—stemming from COVID-19, an economic slowdown, and crackdowns on the private sector—have shaken the optimism that once defined China’s youth.
For today’s Gen Z, uncertainty looms large. Many seek jobs in state-owned enterprises or government departments, which are perceived as more stable and secure. The shift in career goals reflects a broader sense of pessimism, as reflected in high youth unemployment rates. In June 2023, youth unemployment hit an all-time high of 21.3%, and although the government has since revised the numbers, the 15.7% rate recorded in December 2024 still indicates a significant challenge for young job seekers.
Many share Ava Su’s desire for job stability. She plans to take the civil service exam, reflecting a preference for secure, long-term employment. Similarly, Lily Li, a 26-year-old English teacher in Shenzhen, saves 80% of her salary and has dramatically cut back on non-essential spending. Li’s change in priorities mirrors that of many young Chinese people, who are rethinking their spending habits and career aspirations in light of a turbulent economy.
The potential consequences of a saving society
While the rise of frugality among China’s Gen Z may seem like a prudent response to economic instability, it carries potential risks for the broader economy. Economists warn that the growing culture of saving, particularly among younger consumers, could suppress domestic demand at a time when the government is hoping for increased consumption to drive economic growth. With many young people focusing on building savings rather than spending, demand for goods and services could decline, particularly in the mid-price range. This shift could lead to price competition, lowering inflation rates and further stalling economic recovery.
The growing tendency towards frugality also reflects a generational shift in mindset. Gen Z, burdened by the economic pressures of the pandemic and the ongoing property market crisis, is grappling with uncertainty that their predecessors did not face. As economist Gary Ng notes, “This consumption downgrade may hollow mid-price range products and services. China’s long-term potential growth will decelerate.”
A new chapter for China’s economy
The shift towards saving among China’s younger generation signals a profound change in the country’s economic landscape. As Gen Z adopts a more cautious approach to their finances, the long-standing spending habits and optimism seem to give way to a new era of financial discipline. While this shift may offer a sense of personal security, it could also have broader implications for China’s economic growth in the years ahead.
Whether this frugal trend will eventually help or hinder the country’s recovery remains to be seen, but it is clear that China’s Gen Z is no longer looking to spend its way into the future. Instead, they plan carefully for uncertain situations.