Despite the ongoing trend of post-pandemic revenge spending in many parts of the world, a different phenomenon is taking place in China known as revenge saving. Instead of making impulsive purchases, young people in China are saving their money aggressively as the country’s economy continues to struggle.
Christopher Beddor, deputy director for China research at Gavekal Dragonomics, suggests that Chinese youth are sensing the economic downturn that is affecting everyone. This cautious approach to spending is reflected in the 11.8% year-on-year growth of total RMB deposits by households in the first quarter of 2024, as reported by the People’s Bank of China.
Despite China’s first-quarter GDP surpassing expectations with a 5.3% year-on-year growth, forecasts indicate a continued slowdown in the economy, with the International Monetary Fund predicting a 4.5% growth in 2025. The tight labor market is particularly challenging for young people, with an unemployment rate of 14.2% among youth aged 16 to 24 in May, much higher than the national average of 5%.
Jia Miao, an assistant professor at NYU Shanghai, explains that many young people are spending less money simply because they cannot find jobs or struggle to increase their income. With the average monthly salary for undergraduates in China at 6,050 yuan ($832) in 2023, only a 1% increase from the previous year, it is not surprising that confidence and spending among the youth have diminished.
Rein, a market expert, believes that it will take years or even longer for young people to regain confidence and feel comfortable enough to engage in revenge spending. The current economic climate in China is challenging, and the trend of revenge saving among the youth reflects their concerns about the future.