Beijing: China’s 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 global financial crisis bites China’s economy.
Wang Hao, a 24-year-old Beijing office worker, launched his campaign in June to curb weekly living expenses to 100 yuan (Rs730). So far, he says, he has 55,000 participants.
Quality of life: As the global financial crisis hit China’s economy, Wang Hao initiated a campaign to curb weekly living expenses to 100 yuan. Reuters
“The financial crisis has apparently given a lesson on spending to young people in China, including me,” said Wang, who posted his campaign on a popular forum and on his blog. The blog has had 178,000 hits.
China has enjoyed economic growth for years, giving a huge boost to its domestic consumption. Young consumers would spend as much as they earned, if not more, on designer clothes, electronics, entertainment and a wide variety of consumer goods. Now, at least, some are becoming thrifty.
Besides 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 “Ten Mottos for Financial Winter” with a list that includes 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 amid rising unemployment and slowing retail sales as the global economic crisis hits Chinese manufacturers with cancelled orders and factory shut downs.
Officials in Beijing are determined to “protect eight”, shorthand for the goal of achieving 8% growth this year.
That is the minimum rate deemed necessary to maintain social stability and provide jobs for the 15 million-plus people that enter China’s job market every year.
It is a top priority of the Communist Party and the government has allocated 4 trillion yuan in spending to help achieve the goal. 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 slumping consumer confidence in China and could take a toll on the economy if they become even more widespread, said Lin Songli, a senior analyst with Guosen Securities Co. Ltd in Beijing. “Though not quantifiable, confidence is crucial for the economy,” he said.
About 46% of Chinese said their country’s economic situation was good in November 2008, compared with 90% in 2007, according to a survey by French research firm Ipsos published in December.
Jun Ma, chief China economist at Deutsche Bank AG in Hong Kong, said he expected retail sales to grow just 13% this year, partly due to fast falling prices. Retail sales are projected to have grown about 21% in 2008.
Like their counterparts in Western countries, young Chinese white-collar workers in Beijing, Shanghai and Guangzhou, tend to overspend.
A Shanghai government survey in November said office workers in the Chinese financial hub spend an average of 2,500 yuan a month. With an average monthly income in Chinese cities of 2,192 yuan, according to government statistics in September, that means many office workers are spending more than they earn.
Expensive products such as electronic gadgets and luxury goods have sold like hotcakes in China, especially among young professionals who were all too willing to shell out their entire salary to buy items such as iPhones. “I’ve changed my cellphone every six months since graduating from college,” Wang said.
“But when the global financial crisis comes, I’m feeling pressure from my company, which has foreign stakes,” he said, explaining that he was worried about losing his job.
It’s such concerns that are prompting young Chinese professionals to curb their spending, even if most don’t go to the extreme of limiting their expenses to 100 yuan a week.
As for Wang, he is still grappling with the challenge of getting by on 100 yuan a week for all meals, transportation and entertainment costs. In Beijing, 100 yuan buys nine McDonald’s Big Mac burgers, roughly half a tank of petrol, a monthly home Internet connection, or two movie tickets.
To cut costs, Wang now eats steamed buns for lunch, instead of pizza, and he cycles for 20 minutes to work every day, instead of taking buses.
“The point is not only saving money, but to lead a quality life with lower cost,” said Lin Yufei, 24, who launched a group called “Let’s have a 100-yuan week” on popular Chinese social networking website douban.com.