As China strives to transition from being a mass producer of affordable goods to a high-tech economy, its youth face significant challenges. Recent graduates have been reporting frightful difficulties finding a job with any security at all and costs of living soaring, as youth unemployment hovers around 20%. Young Chinese are saving too much, and that has policy wonks worried. Right now, per the New York Fed, consumer spending accounts for just 39% of the nation’s GDP—an extraordinary decline considering that the 60% average of most developed countries would constitute a major rebound.
Renowned economist George Magnus has been keeping a sharp eye on this exciting trend. He has noticed a pronounced change in the Chinese economy. This shift is in large part due to a gap between the skills graduates have and those employers need. Yet the ongoing, man-made, property disaster has added new layers of complication. For most young people—particularly those in larger cities—home ownership is an unattainable goal.
The situation is exacerbated by deflationary pressures. China’s economy has proven remarkably resilient in the past. Even with past upheaval such as the COVID-19 pandemic and the United States’ tariff war, it has emerged unscathed thus far, though a changing climate poses an unprecedented gamble.
Young adults are getting creative with the current economic climate by embracing minimalistic lifestyles. Influencers like Zhang Small Grain of Rice advocate for frugality on social media, sharing their experiences with their 97,000 followers on Xiaohongshu. Zhang’s call for frugality and austerity is a timely reminder evoking the realities in our burgeoning economic landscape.
“My work is dedicated to a minimalist way of life.” – Zhang Small Grain of Rice
One young man in his 20s commented on enjoying the simple life. He offered as proof the fact that this very choice allowed him to save more than $180,000 in only six years’ time. He was worried about his friends, many of them still not working, still living at home as they look for jobs in a still-slack labor market.
“Some of my friends are unemployed, still living at home and looking for a job.” – A young man in his 20s
Yet another young woman from deep central Beijing expressed similar sentiments, reiterating that her financial future is her number one concern.
“The economy is a bit off right now. I hope it gets better so we can all have a better life.” – A young man in his 20s
Magnus suggests that the push towards advanced technologies like robotics and artificial intelligence further complicates job prospects for new graduates.
“Right now, making money is more important to me. I actually need to expand my income sources and cut my costs.” – A young woman in central Beijing
China’s export and investment-driven economic model is in dire straits Magnus argues, and could be a big mistake in the long-run.
“Of course, that’s not being helped by the push to become a champion in robotics and AI because, at least for the time being, this is something of a dampener on job opportunities. Tech isn’t really that labour intensive.” – George Magnus
The cultural backdrop is equally, if not more important, in informing these spending habits. As Zhang observes, frugality is in fact an essential part of Chinese culture and influenced by Confucianism.
“You have a very export-oriented and investment-driven economy and what we see now is that these parts are too big for the economy to stay healthy.” – Helena Lofgren
Most older millennials and younger Gen-Xers will relate to this cultural focus on being thrifty. They’re choosing lifestyles that celebrate saving over spending. She thinks learning how to avoid consumption traps can take the pinch out of their paycheck and less stress out of their peers’ lives.
“My grandfather’s generation was very frugal, very thrifty. It is part of Chinese tradition. For Chinese people to be economical is in their bones.” – Zhang
As China grapples with this unprecedented economic transition, its young people continue to be on the cutting edge of transformation. They’re redefining their lifestyles to meet the demands of an unpredictable new normal while pulling from a set of cultural values that run deep.
“I hope more people will understand consumption traps so they can save. This will reduce their stress and relax them.” – A 24-year-old influencer
As China navigates this complex economic transition, its youth remain at the forefront of change. They are adapting their lifestyles to fit an uncertain future while reflecting on values rooted deeply in their culture.