China's young office workers are tightening their belts, cutting back spending on everything from clothes to fast food despite government efforts to boost consumption to stave off the worst effects of a global recession. Websites and blogs popular among young Chinese professionals are extolling the virtues of frugality as the financial crisis takes effect. Wang Hao, 24, a Beijing office worker, launched his internet campaign in June to limit weekly living expenses to 100 yuan (Dh53.70). So far, he says, he has 55,000 other who have joined in.
"The financial crisis has apparently given a lesson on spending to young people in China, including me," said Mr Wang, who posted his campaign on a popular forum and on his blog. The blog has had 178,000 hits. During the past 20 years, China has enjoyed phenomenal economic growth, giving a huge boost to its domestic consumption. Young consumers, mostly in their late 20s and early 30s, would spend as much as they earned, if not more, on designer clothes, electronics, entertainment and consumer goods.
Now, at least some are becoming thrifty. Besides Mr Wang's cost-cutting crusade, another website is running a similar "100 yuan for a week" campaign, and still other internet forums and websites offer budget tips, including recipes for meals that cost under 10 yuan. One website offers "10 mottos for financial winter" with a list that includes to avoid quitting your job, starting a business, buying a car and having a baby.
These cost-cutting campaigns are in sharp contrast to a government drive to encourage spending as unemployment rises and retail sales slow. Chinese manufacturers are struggling, having to deal with cancelled orders and factory shutdowns. Officials in Beijing are determined to "protect eight", shorthand for the goal of achieving 8 per cent growth this year. That is the minimum rate deemed necessary to maintain social stability and provide employment for the more than 15 million people who enter China's job market every year.
It is a priority of the Communist Party and the government has allocated 4 trillion yuan (Dh2.15 trillion) in spending to help achieve it. However, some economists wonder if that will be enough to prop up domestic spending. While still mostly a grass-roots campaign, cost-cutting drives are indicative of the slump in consumer confidence in China and could take a toll on the economy if they become more widespread, says Lin Songli, a senior analyst with Guosen Securities in Beijing. "Although not quantifiable, confidence is crucial for the economy."
About 46 per cent of Chinese reported that their country's economic situation was good last November compared with 90 per cent in 2007, according to an Ipsos survey published last month. Jun Ma, the chief China economist at Deutsche Bank in Hong Kong, says he expects retail sales to grow just 13 per cent this year, partly due to fast-falling prices. Retail sales are projected to have grown about 21 per cent last year.
Like their counterparts in western countries, young Chinese professionals in big cities such as Beijing, Shanghai and Guangzhou, tend to overspend. According to a Shanghai government survey last November, office workers in the Chinese financial hub spend an average of 2,500 yuan a month. With an average monthly income in the cities of 2,192 yuan, that means many office workers are spending more than they earn.
Expensive products such as electronic gadgets and luxury goods are popular, especially among young professionals who will spend their entire salary on such items as an Apple iPhone. "I've changed my phones every six months since graduating from college. But when the global financial crisis comes, I'm feeling pressure from my company which has foreign stakes," says Mr Wang, explaining that he is worried about losing his job.
It is such concerns that are prompting young Chinese professionals to curb their spending, even if most do not go to the extreme of limiting expenses to 100 yuan a week. As for Mr Wang, he is still grappling with the challenge of getting by on 100 yuan a week for all meals, transport and entertainment costs. In Beijing, 100 yuan buys nine hamburgers, half a tank of petrol, a monthly home internet connection or two movie tickets.
To cut costs, Mr Wang now eats steamed buns for lunch instead of pizza, and cycles to work instead of taking buses. "The point is not only saving money, but to lead a quality life with lower cost," says Lin Yufei, 24, who launched a group called "Let's have a 100-yuan week" on a popular Chinese social networking site. "I spend 10 yuan to commute to work every day, which leaves me only 50 yuan for living," complained one participant on Mr Lin's site, using the name "Traffic Cost is a Problem".
* Reuters