Education remained the most popular category of planned spending for Chinese consumers, according to a survey conducted by the People’s Bank of China in the second quarter of 2022.
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BEIJING – The People’s Bank of China found in a second-quarter survey that Chinese consumers’ propensity to save has reached its highest level in two decades.
Rather than spending or investing, 58.3% of survey respondents said they would rather save their money. That’s a jump from 54.7% in the first quarter, which was already the highest percentage recorded for data going back to 2002.
The new record came as mainland China imposed strict Covid controls in the second quarter to control the country’s worst outbreak of the virus since early 2020. Shanghai closed in April and May, while Beijing banned dining in restaurants in May, among the restrictions other.
Both cities have since relaxed those controls, and this week the central government reduced the quarantine time for international travelers and local contacts of people infected with the Covid virus.
The People’s Bank of China said its quarterly survey, conducted since 1999, covered 20,000 people with bank deposits in 50 large, medium and small-sized cities in the country. The latest results came on Wednesday.
The main driver of consumer caution is concern about future income.
By several measures, the People’s Bank of China survey indicated lower income expectations. The study’s index of job expectations fell to 44.5%, the lowest level since the first quarter of 2009 at 42.2%, according to the CEIC database.
The overall percentage of respondents most likely to spend was slightly higher from the first quarter by 0.1 percentage point to 23.8%.
The survey found that if Chinese consumers plan to increase spending in the next three months, education is the most popular choice, followed by health care and expensive items.
However, consumer sentiment to invest declined 3.7 percentage points to 17.9% in the second quarter, with stocks being the least attractive asset.
The unemployment rate in China’s 31 largest cities has surpassed epidemic heights this year, reaching 6.9% in May. The unemployment rate for young people aged 16-24 remained much higher, at 18.4% in May. The number of higher education graduates has reached new annual records in the past few years.
China tries to boost youth employment
In order to tackle youth unemployment, the country’s economic planning agency will implement a “rescue policy” to help companies stabilize and expand their staffing, Yang Yinkai, deputy secretary-general of the National Development and Reform Commission, told reporters this week. This is according to CNBC’s translation of Chinese.
He said that small businesses that offer university graduates a certain number of jobs and meet other conditions can get preferential support. Yang added that the government will conduct vocational skills training, and speed up the recruitment of civil servants and teachers from kindergarten to middle school.
Earlier this month, Beijing called on state-owned companies to increase their hiring of college graduates this year.
In a statement to CNBC this month, the People’s Bank of China said its employment-friendly measures include helping migrant workers and college graduates become eligible for secured startup loans in areas far from their hometowns.
The central bank said it would encourage banks to extend loan repayment deadlines to small businesses and truck drivers, as well as consumer loans and mortgages for personal homes.