Chinese savings plans hit a record high in the second quarter; job concerns are increasing

Education remained the most popular category for Chinese consumers’ planned spending, according to a People’s Bank of China survey in the second quarter of 2022.

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BEIJING — Chinese consumers’ propensity to save is at its highest in two decades, the People’s Bank of China found in a second-quarter survey.

Instead of spending or investing, 58.3% of respondents said they would rather save their money. That’s a 54.7% jump in the first quarter, which was already the highest on record for data going back to 2002.

The new record came as mainland China imposed strict Covid controls in the second quarter to contain the worst outbreak of the virus in the country since early 2020. Shanghai went into lockdown in April and May, while Beijing banned eating out in restaurants in May, among other restrictions.

Both cities have since relaxed those controls, and this week the central government shortened the quarantine time for international travelers and for local contacts of people infected with Covid.

The PBOC said its quarterly survey, conducted since 1999, included 20,000 people with bank deposits in 50 large, medium and small cities in the country. The latest results came out on Wednesday.

A big driver of consumer caution is concerns about future earnings.

Due to various measures, the PBOC survey pointed to declining income expectations. According to the CEIC database, the study’s job outlook index fell to 44.5%, the lowest since the first quarter’s 42.2% printout in Q1 2009.

The total share of respondents most likely to spend increased slightly from the first quarter by 0.1 percentage point to 23.8%.

If Chinese consumers planned to increase spending over the next three months, the most popular choice was education, followed by health care and expensive items, the study found.

However, consumer investment propensities declined 3.7 percentage points to 17.9% in the second quarter, with equities being the least attractive asset.

The unemployment rate in China’s 31 largest cities has surpassed pandemic peaks this year, reaching 6.9% in May. The unemployment rate for young people aged 16 to 24 has remained much higher at 18.4% in May. The number of higher education graduates has reached new annual records in recent years.

China tries to boost youth employment

To tackle youth unemployment, the country’s economic planning agency will implement a “rescue policy” to help companies stabilize and expand their workforces, Yang Yinkai, deputy secretary-general of the National Development and Reform Commission, said. this week to reporters. According to a CNBC translation from Chinese.

He said small businesses that offered graduates a certain number of jobs and met other conditions could receive preferential aid. Yang added that the government would provide vocational training and accelerate the recruitment of civil servants and teachers from kindergartens to high schools.

Earlier this month, Beijing also called on state-owned enterprises to hire more graduates this year.

In a statement to CNBC this month, the PBOC said its employment-friendly measures included helping migrant workers and university graduates qualify for guaranteed starter loans in regions far from where they live.

The central bank said it would encourage banks to extend repayment terms on loans for small businesses and truck drivers, as well as for consumer loans and personal home mortgages.