Chinese women seek online support to save money – 04/10/2024 – Market

“I had almost no money left every year. I felt insecure, but I didn’t know what to do,” says Xiao Zhuo, 36, a mother of two who lives in Xiamen, a city in southeast China.

During the pandemic, Xiao Zhuo and her husband had to take a 50% pay cut. It was a huge blow for the family, who also had to care for Xiao’s mother, who was diagnosed with cancer five years ago.

It has become fashionable among young Chinese people to search for and find “da zi”, which means “partners”, with similar interests on the internet. But instead of looking for people who wanted to travel or exercise together, Xiao Zhuo looked for someone who wanted to save money together.

Xiao Zhuo was far from alone. The hashtag “saving da zi” first appeared on Xiaohongshu, the Chinese version of Instagram, in February 2023 and has attracted 1.7 million views since then, according to data analytics firm Newsrank.

On the Weibo network, topics related to the practice were viewed millions of times. It’s difficult to get an exact number, but through social media, thousands of people have found savings partners in online groups.

The majority of people in these groups are women, aged between 20 and 40, many of them mothers.

Some say they want to save for their children’s education, which is becoming more expensive; Some say they prefer to save money because few investments — like shares or property — are profitable.

However, many say they need to prepare for a potential job loss or pay cut as the economy struggles.

China already has one of the highest household savings rates in the world, and the recent increase reveals “low confidence in the future economy”, says Lu Xi, professor of public policy at the National University of Singapore.

Chinese families saved around 138 trillion yuan (US$19.1 trillion) in bank deposits in 2023, which represents an increase of almost 14% compared to the previous year, according to official data.

After years of harsh zero-Covid policy, the recovery of the Chinese economy was short-lived. And now it faces a housing crisis, deflationary pressure, falling foreign investment and growing local government debt.

In China, women are generally responsible for managing daily household expenses. The fact that more women are saving is an indicator that unemployment is spreading — not just among young people, according to the professor.

The unemployment rate has grown for three consecutive months, according to the latest official data.

And the growing desire to save will make it harder for China to rebalance the economy. The dizzying growth of recent decades has been driven by investment in infrastructure and low-cost production. But as the Chinese economy matures, experts argue it is necessary to boost domestic consumption to sustain growth.

Lu Xi says high savings could lead to a liquidity trap for China, mirroring what happened in Japan in the 1990s.

People would save money and avoid spending or investing, even if interest rates are very low, making monetary policy ineffective in encouraging the economy.

Anxiety and friendship

Xiao Zhuo feels lucky to work in the clean energy sector, a booming industry that reportedly contributed 40% to the country’s economic growth last year.

However, she feels compelled to “prepare for danger” as she sees many family members and friends lose their jobs — including those who work in public service, such as in hospitals and schools.

In February, Xiao Zhuo joined several savings groups. Every day, members have to record their budget and consumption. They also help stop each other from making impulse purchases.

One member of the group was tempted to buy a luxury bag that cost 5,000 yuan. After talking to other women, she bought a second-hand bag that cost less than 1,000 yuan.

Xiao Zhuo also learned some money-saving tricks. She discovered, for example, a cell phone application that has a heart-shaped spreadsheet, with 365 cells indicating a daily savings target ranging from 1 to 183 yuan. After a year, she will have saved almost 34 thousand yuan (about R$24 thousand).

She is surprised that so many other people also want to save and feels like she has a partnership with her saver friends.

“It would be difficult for me to persist alone.”

Xiao Zhuo became friends with one of her “da zi”, a teacher pregnant with her first child. And after reaching her monthly savings goal, Xiao Zhuo ordered roses online to be delivered 2,000 km away in Gansu.

Xiao Zhuo’s shopping impulses subsided. Previously, she put everything she liked in the supermarket cart. Now, make a shopping list and stick to it.

Within a month of getting savings partners, she reduced her expenses by 40%. And she is optimistic that she will be able to save 100 thousand yuan (R$70 thousand) in a year – a considerable increase over the current target.

Other women also say that having “da zi” has helped them save money. One of them says that she now cooks alone and has reduced unnecessary purchases; another says she has saved more by keeping busy at work and will look for new hobbies that don’t cost much.

Cash

Some women opted for a more traditional method of saving — keeping money at home.

It is still unusual, since China has become a country that rarely uses cash. Almost 70% of the population adopts cell phone payments, according to Statista.

“I feel safe and satisfied when I see stacks of bills getting thicker and thicker,” says Chen, 32, who runs a beauty salon in the central province of Henan.

Every month, she withdraws most of her income from the bank and puts the money in a box. When it reaches 50,000 yuan, she will make a deposit.

She now also uses cash to make purchases. It’s inconvenient, she says, but it’s a way to reduce consumption and “delay gratification.”

Amid the economic crisis, Chen lost a significant number of clients and many of those who remained reduced spending.

She and her husband are only children, which means they have to care for four elderly parents. She wanted to save at least one million yuan for each of her two children. In China, men are expected to have a home when they get married. Therefore, it is common for parents to buy properties for their children.

She says the family needs at least 5 million yuan in savings — which probably won’t be enough since she’s pregnant again.

“In the past, I didn’t have any savings plan, but I still had some money left over. Now, saving has become more challenging. Having cash on hand makes me feel less anxious.”

This text was originally published here.