Revenge savings: New trend among Chinese youth

"Revenge savings" describes the desire to limit spending as much as possible

By AFPRelaxnews

Published: Jul 4, 2024 05:20:21 PM IST

Updated: Jul 4, 2024 05:22:05 PM IST

To regain control of their finances, young Chinese are setting themselves extreme savings targets. Image: CFOTO/Future Publishing via Getty Images

For several months, unemployment has been undermining the purchasing power of young people in China. This economic context has prompted them to make drastic decisions to regain control of their finances, giving rise to the "revenge savings" movement.

"Revenge savings" describes the desire to limit spending as much as possible. This expression echoes "revenge spending," effectively referring to the opposite behavior. Chinese consumers spent lavishly after the lifting of the country's zero Covid policy and its draconian measures. But they have since eased off, with the country's economy showing signs of weakening.

To regain control of their finances, young people in China are trying not to spend a single penny unnecessarily. They share tips on how to save as much as possible on social networks and other popular platforms, such as Xiaohongshu. Some internet users sing the praises of homemade dishes, made from cheap ingredients, while others go to community canteens to eat. This decision is all the more surprising given that these restaurants are usually for senior citizens.

Many people in China are turning to "savings partners" ("saving dazi", in Mandarin) to help them manage their money better. They exchange tips, strategies and support with these like-minded people on social networks, helping one another to avoid giving in to the siren calls of overconsumption. These "savings partners" don't claim to be financial advisors, but rather coaches: they encourage their followers to stick to their budget and avoid impulse buying. For example, thanks to her "savings partner," Kathy Zhuo, a mother living in Fujian province, managed to cut her spending by 40% in one month, according to the BBC.

Savings that are less popular with Beijing

While that's good news for people like Kathy Zhuo, it's not such good news for Beijing. In fact, China is one of the countries where households save the most. It alone accounted for 28% of the world's savings in 2023, according to figures from the International Monetary Fund, quoted by the Financial Times. That's almost as much as the United States and the European Union combined (33%). China's leaders would like to see all this money reinvested in the economy to boost growth.

But that's without taking into account mass youth unemployment, which is slowing down consumption by this segment of the population. "People refusing to spend money is a true phenomenon here. For some of the young people, it’s simply because they cannot find a job or they just found that it is more difficult to increase their income. They have no choice but to spend less money," Jia Miao, assistant professor at NYU Shanghai, told CNBC.

Against this backdrop, it's easy to understand why "revenge savings" are becoming increasingly popular in China. In the absence of official figures, it's difficult to gauge the true scale of this phenomenon. However, the proliferation of hashtags and discussions on the subject on social networks testifies to a growing interest in saving money among young people in China.