Anna Luan is worried about the future. The Shanghai internet business where she works hasn’t paid her salary in full since April, when city authorities instituted a strict lockdown to contain the spread of Covid-19. Luckily the 30-year-old had built up savings through the pandemic, which she’s dipped into to cover regular expenses. She’s also used some of that money to pay off 200,000 yuan ($29,530) in mortgage debt on the two homes she owns in her hometown of Changzhou. “So many companies are laying off people and cutting pay,” Luan says. “Now I just want to save any spare cash I have and don’t even dare to spend.”
Recent surveys show Chinese households are more pessimistic about future income growth than they’ve ever been—even at the pandemic’s start in 2020 or after the global financial crisis. That’s motivating them to cut back debt and beef up savings, a trend that could depress economic growth for years.