Sunday, January 4, 2009

Yuan Watch : Belt tightening

By Michael Wei
Mon Jan 5, 2009 1:34am GMT

BEIJING (Reuters) - China's office workers are tightening their belts, cutting back spending on everything from clothes to fast food, despite government efforts to boost consumption to stave off the worst effects of a global recession.

Websites and blogs popular among young Chinese professionals are extolling the virtues of frugality as the global financial crisis bites China's economy.

Wang Hao, a 24-year-old Beijing office worker, launched his campaign in June to curb weekly living expenses to 100 yuan ($14.60). So far, he says, he has 55,000 participants.

"The financial crisis has apparently given a lesson on spending to young people in China, including me," said Wang.

China has enjoyed phenomenal economic growth for years, giving a huge boost to its domestic consumption. Young consumers, mostly in their late twenties and early thirties, would spend as much as they earned, if not more, on designer clothes, electronics, entertainment and a wide variety of consumer goods.

Now, at least, some are becoming thrifty.

Besides Wang's cost-cutting crusade, another website is running a similar "100-yuan for a week" campaign, and still other Internet forums and websites offer budget tips, including recipes for meals that cost under 10 yuan ($1.46).

One website offers "Ten Mottos for Financial Winter" with a list that includes avoid quitting your job, starting a business, buying a car and having a baby.

These cost-cutting campaigns are in sharp contrast to a government drive to encourage spending amid rising unemployment and slowing retail sales as the global economic crisis hits Chinese manufacturers with canceled orders and factory shut downs.

Like their counterparts in western countries, young Chinese white-collar workers in big cities, such as Beijing, Shanghai and Guangzhou, tend to overspend.

Expensive products such as electronic gadgets and luxury goods have sold like hotcakes in China, especially among young professionals who were all too willing to shell out their entire salary to buy such items as an Apple iPhone.

"I've changed my cell phones every six months since graduating from college," Wang said.

"But when the global financial crisis comes, I'm feeling pressure from my company which has foreign stakes," he said, explaining that he was worried about losing his job.

It's such concerns that are prompting young Chinese professionals to curb their spending, even if most don't go to the extreme of limiting their expenses to 100 yuan a week.

"The point is not only saving money, but to lead a quality life with lower cost," said Lin Yufei, 24, who launched a group called "Let's have a 100-yuan week" on popular Chinese social networking website

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