Communist Revolution to Consumer Revolution: A study of saving and consumption patterns for urban members of China’s Generation Y and the social drivers behind those patterns

Abstract

In November of 2013 during the Communist Party’s Third Plenum, the government of the PRC announced an effort to shift the drivers of economic growth from heavy government spending and exports to domestic demand. This shift will require a push to increase consumption and drive down savings among Chinese citizens since past studies have shown a high propensity to save among Chinese and relatively low levels of personal consumption when compared to international peers, attributed to China’s unique growth path and culture. Yet no study has examined the consumption patterns of China’s youngest generation, Generation Y, which has grown up under widely different circumstances than previous generations. My paper analyzes a sample population of 70 people between 22 and 34 in Chinese cities. It concludes that due to societal factors related to the One Child Policy and the Reform and Opening of the late 20th Century, that Generation Y saves less and consumes proportionately more than the rest of Chinese society. Factors driving this trend include this generation’s greater susceptibility to advertisements, their lower incomes, and their strong belief in continued economic growth, which are factors unique to Generation Y. Understanding Generation Y and their savings and consumption patterns will be important for the Chinese government as it works to increase individual consumption as a way to fuel economic growth, as well as for many outside of China since Chinese consumers continue to make up an increasingly large proportion of the global marketplace.