By Ethan Wang, Yukun Zhang and Ryan Woo

BEIJING (Reuters) – The frugal trend that began in China during the pandemic’s economic disruption is intensifying, as Gen Z prioritizes saving over spending.

On China’s Instagram-like platform, Xiaohongshu (or RedNote in the West), many under-30s are exchanging tips on how to save money on office lunches and budget shopping. Influencers promote financial discipline, with over 1.5 million saving-related posts garnering over 130 million views.

Ava Su, a 26-year-old Alibaba employee, stated, “I think it’s important to protect my own wallet,” as she aims to save up 2 million yuan ($273,512), reflecting a cautious financial attitude.

Data from Yu’e Bao shows users born after 2000 made an average of 20 deposits a month as of late 2024, double that of May, with individual account funds nearly 3,000 yuan, representing a 50% increase from the previous year.

While saving is increasingly common, some economists warn that it could dampen demand, posing risks to China’s GDP recovery. This saving trend contrasts sharply with the spending habits of the “moonlight” generation from the 1980s and 1990s, who enjoyed steady job growth and rising incomes.

COVID-19, economic slowdown, and government regulations shifted today’s youth mindset towards preparation for uncertainty. Unemployment among Chinese aged 16-24 hit a record 21.3% in June 2023, triggering officials to reassess how data was compiled.

Lily Li, a 26-year-old teacher, saves 80% of her salary and emphasizes stability over corporate aspirations. Unlike the millennial focus on enjoyment, China’s Gen Z faces existential challenges amid economic struggles, with sentiments like “tang ping” (lying flat) and “involution” reflecting their outlook.

This more cautious approach to spending could lead to increased competition and price drops in mid-range sectors, undermining China’s long-term growth potential. China’s GDP increased by 5.0% in 2024, but growth is anticipated to slow in the coming years.

($1 = 7.3123 Chinese yuan renminbi)