After New Policies in China: Many Peoples are Learning to Save More Than Spend
In the wake of the recently concluded Third Plenary Session of the 20th Central Committee of the Chinese Communist Party, an unusual trend is emerging in the world's second-largest economy.
Beijing—— In the wake of the recently concluded Third Plenary Session of the 20th Central Committee of the Chinese Communist Party, an unusual trend is emerging in the world's second-largest economy. Rather than indulging in consumer spending, many Chinese citizens are increasingly focused on finding ways to save money.
This shift in behavior has become more pronounced following the release of second-quarter economic data by China’s National Bureau of Statistics. While the official numbers point to a sluggish economy, many on the ground feel the downturn more acutely in their daily lives.
Despite the government's introduction of a series of "reform policies" during the plenary session aimed at revitalizing economic activity, the expected resurgence has yet to materialize. After the end of strict COVID-19 measures last year, there was a collective hope for increased income and a return to normalcy, but that hope remains unfulfilled.
On social media, a growing number of Chinese citizens are voicing their frustrations about plummeting incomes and rising costs. However, these expressions of discontent are often met with censorship, as the country’s internet regulators view such discussions as attempts to undermine confidence in the economy.
On platforms like Xiaohongshu, a popular social media site among young Chinese, users have adapted by shifting the conversation from overt economic complaints to more subtle discussions about how to save money in difficult times.
In major cities like Beijing, savvy young people are sharing tips on how to maximize limited resources, a practice known colloquially as "cashing in on every opportunity."
For instance, during weekends in Beijing, commercial and non-commercial exhibitions and events abound. Xiaohongshu users often compile detailed guides on how to navigate these events without spending unnecessarily, turning what would be a consumer outing into an exercise in frugality.
As one user put it, “Why spend money when you can figure out how to earn or save it instead?”
This phenomenon is rarely reported in Chinese media, as it paints a picture of an economy struggling with low consumer confidence—an unsettling prospect for investors.
In Beijing, some white-collar workers have become more mindful of their spending, opting for budget-friendly meals, such as a $3 Chinese buffet near Zhongguancun Science Park.
In Shanghai, people are seeking out hidden, inexpensive dining options near the Lujiazui financial district, while some bakery chains have begun offering breakfast buffets for under $2.
This trend, known as “consumption downgrading,” has become more apparent since the conclusion of the Party’s plenary session, where the focus seems to have shifted from economic optimism to a renewed emphasis on thrift.
On Xiaohongshu, young people are lamenting the increasing difficulty of making ends meet, with some even questioning whether they can afford basic necessities like food. While some privileged groups, such as the children of wealthy or politically connected families, remain largely insulated from these concerns, the broader sentiment reflects a growing unease.
Many young Chinese nostalgically recall the more stable economic conditions of five or six years ago when inflation and deflation were more transient and less severe.
However, after the COVID-19 pandemic, Western economists have noted that China’s economic recovery has been sluggish, leading to a noticeable decline in consumer confidence. This sentiment has led some to liken the current period to a “lost decade” in economic terms.
Despite reassurances from Chinese economists that the downturn is temporary, the public remains skeptical. The government's response has been to introduce new policies in an attempt to prevent economic distress from spilling over into broader social unrest.
This approach has been likened to continually adding water to a pot of boiling noodles to prevent it from boiling over—a temporary fix rather than a long-term solution.
On August 1st, China’s National Development and Reform Commission (NDRC) announced its collaboration with various departments to draft legislation promoting the private economy, addressing challenges such as market access and fair enforcement.
While these moves might seem to signal a breakthrough on the surface, many private entrepreneurs remain cautious, increasingly eyeing Southeast Asia as a more promising market with greater growth potential.
Meanwhile, local government debt remains a significant issue, exacerbated by the central government's recent fiscal reforms.
Vice Minister of Finance Wang Dongwei recently stated that the central government is considering shifting the collection of consumption taxes to local governments to enhance their revenue streams and improve the local business environment.
However, this shift could create disparities, with more prosperous regions likely to benefit disproportionately.
At the same time, China's major state-owned banks and some joint-stock banks have discontinued their “large deposit” services, which allowed customers to deposit more than 50,000 yuan (about $7,000) for over a year. Banking experts argue that such deposits are counterproductive to economic recovery, as they encourage saving over spending during a period when the government is trying to stimulate consumer activity.
This move has further eroded the sense of financial security for many, leading some to consider drastic measures such as moving into retirement homes to significantly reduce their living expenses. “No one knows what the economy will look like tomorrow.
We’re just taking it one day at a time,” lamented Li Jie, a resident of Shanghai, who is contemplating his third move, this time to Guangdong, in search of better economic prospects.