China's Gen Z is redefining priorities by spending more on experiences
Something new is happening among China's Gen Z crowd.
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The backstory: China's economy has seen several challenges recently. For example, initially targeting a 5% growth rate for the year, China is now facing the possibility of missing that goal. Plus, the country is grappling with a declining population, and the post-COVID economic recovery has been slower than expected.
One big issue is also the high youth unemployment rate in the nation. In June, China recorded a record-breaking youth unemployment rate of over 20% among 16 to 24-year-olds in urban areas. This sent alarm bells ringing, hinting at broader economic difficulties, and the government even stopped releasing the data for now.
In an attempt to stimulate the economy, the central bank decided to reduce borrowing costs. But the overall unemployment rate in the country still inched up to 5.3% in July, indicating that deeper-rooted issues may be at play. This situation is a big deal for China and global investors eyeing the country's markets, especially given the ongoing struggles with the property sector and geopolitical tensions.
The development: But something new is happening among China's Gen Z crowd. Throughout the year, those born after 1995 have been spending more on experiences like going to movies, bars and sporting events and getting beauty services.
A survey in August by Mintel Group showed that 40% of respondents were shelling out more cash on leisure activities than other things like clothing. So, even with those rising youth unemployment rates, Chinese zoomers are doubling down on travel and entertainment.
A senior research analyst at Mintel, Blair Zhang, pointed out that "experience-led spending" is now the trend for Gen Z in China as they aim to get back to normal life post-COVID. But money doesn’t grow on trees, so not having a job is putting things into perspective – instead of saving or splurging on expensive items, zoomers are choosing more affordable experiences.
Key comments:
“When the job market is that bad, why are we struggling and giving ourselves a hard time?” said recent college grad Yang Zhifeng to Bloomberg. “This is a good time to rethink what lifestyle fits us better and makes us happier.”
"Let's not forget about the draconian lockdown measures," said Fang Xu, an urban sociologist at the University of California, Berkeley. "The young people are still recovering."
"The unemployment rate is an important economic benchmark. These kinds of numbers can be highly politicized," said Eli Friedman, a sociologist specializing in China's labor politics and teaching at Cornell University's ILR School.
"Experience-led spending, from going to the cinema and visiting exhibitions to exercising outdoors, has become the mainstream way for Gen Z to resume their lives post Covid," said Mintel senior research analyst Blair Zhang.
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