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

Education remained the most popular category for planned spending by Chinese consumers, 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 level in two decades, the People’s Bank of China found in a second-quarter survey.

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 on record for data dating back to 2002.

The new record came as mainland China enforced strict Covid controls in the second quarter to control the worst virus outbreak in the country since the start of 2020. Shanghai closed in April and May, while Beijing banned dining out in May, among other restrictions. .

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

The PBOC said its quarterly survey, conducted since 1999, covered 20,000 people with bank deposits in 50 large, medium and small cities nationwide. The latest results fell on Wednesday.

Worries about future income are an important factor in consumer caution.

By multiple metrics, the PBOC survey highlighted lower revenue expectations. The survey’s index for job prospects fell to 44.5%, the lowest since the first quarter of 2009, at 42.2%, according to the CEIC database.

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

If Chinese consumers expected to increase their spending over the next three months, the most popular choice was education, followed by health care and big-ticket items, according to the survey.

However, consumers’ propensity to invest fell 3.7 percentage points to 17.9% in the second quarter, with equities the least attractive asset.

The unemployment rate in China’s 31 largest cities surpassed pandemic highs this year to hit 6.9% in May. The unemployment rate for young people aged 16 to 24 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 enterprises stabilize and increase their workforce, Yang Yinkai, deputy secretary-general of the commission, said this week. national development and reform. This is according to a CNBC translation from Chinese.

He said small businesses that offered university graduates a certain number of jobs and met other conditions could get preferential support. Yang added that the government will organize vocational training and speed up the recruitment of civil servants and teachers for kindergartens and middle schools.

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Earlier this month, Beijing also called on state-owned enterprises to increase their recruitment of university graduates this year.

In a statement to CNBC this month, the PBOC said its job-friendly measures include helping migrant workers and college graduates become eligible for guaranteed start-up loans in remote areas of their hometowns. ‘origin.

The central bank said it would encourage banks to extend loan repayment terms for small businesses and truckers, as well as consumer loans and mortgages for personal residences.

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