China’s youth embrace frugality amid economic uncertainty and high unemployment

China's youth embrace frugality amid economic uncertainty and high unemployment

China's government is pushing for higher domestic spending to revive economic growth, but young consumers-facing record unemployment, job insecurity, and a collapsing property market-are tightening their belts instead. Youth unemployment has lingered near 20% for months, while those employed fear layoffs or wage cuts, making homeownership and financial stability feel out of reach. The result: a surge in frugal living trends, amplified by social media influencers promoting extreme savings strategies.

Social media fuels 'minimalist survival' movement

Platforms like Xiaohongshu are flooded with content teaching users how to live on minimal budgets. Zhang Small Grain of Rice, a 24-year-old influencer with 97,000 followers, builds her brand around rejecting what she calls "consumption traps." Her videos demonstrate using a single bar of soap for all hygiene needs instead of pricier skincare products, or showcasing durable, low-cost clothing. "I hope more people will recognize these traps, save money, and reduce their stress," she told the BBC.

Others, like the 29-year-old known online as Little Grass Floating in Beijing, document ultra-low-budget meals-claiming two meals for under $1 (76p). A sales firm employee, he asserts his frugality has allowed him to save over $180,000 in six years. When asked if he expects a future family to adopt the same lifestyle, his response was blunt: "I don't know."

Economic pessimism drives savings over spending

Analysts warn China's growth model-long reliant on exports and investment-faces long-term risks if domestic consumption, currently just 39% of GDP (compared to ~60% in developed economies), doesn't rise. Unlike the U.S., where credit card debt is a concern, China's challenge is the opposite: consumers, especially the young, are saving aggressively amid fears of worsening conditions.

A young woman in central Beijing, whose salary was cut after changing jobs, exemplified the sentiment: "Making money is my priority now. I need to diversify my income and slash expenses." She added, "The economic environment is so bleak-jobs are scarce, and even those who have them don't know how long they'll last."

Structural shifts leave graduates underemployed

China's transition from low-cost manufacturing to high-tech industries is creating a skills mismatch. Economist George Magnus, of Oxford University's China Centre, cited data from Beijing recruitment firms showing university graduates-even those with master's degrees-taking jobs as delivery drivers. "There's a disconnect between the qualifications students earn and labor market demand," he said. The push into robotics and AI, while strategically vital, further reduces job opportunities in the short term.

Helena Lofgren, a researcher at the Swedish Institute of International Affairs, argued China's economy remains "too dependent on exports and state-directed investment." Without stronger domestic consumption, she warned, "the imbalance could leave the country vulnerable to external shocks," such as a sudden drop in global demand.

Deflationary spiral risks deepening slowdown

Deflation is exacerbating the problem. Consumers delay purchases-from furniture to electronics-anticipating further price drops, forcing businesses to cut costs or close. While lower prices might seem beneficial, prolonged deflation can stifle growth by squeezing corporate profits and wages.

Government incentives to replace old cars or appliances have had limited impact. Influencers like Zhang frame frugality as cultural: "My grandfather's generation was extremely thrifty. For Chinese people, economizing is instinctive." Yet without systemic changes-such as stronger social safety nets or higher minimum wages-analysts doubt consumption habits will shift soon.

Youth skepticism persists

A 20-something Beijing resident, whose friends include unemployed graduates still living with parents, captured the mood: "The economy is struggling. I hope it improves, but I'm not optimistic." His sentiment reflects a broader disillusionment among young Chinese, who see few paths to upward mobility in an era of stagnant wages and shrinking opportunities.