Speaker 1: Bloomberg Audio Studios, podcasts, radio news. It's one am and
Speaker 1: the streets in Shanghai are relatively empty. Thomas Wu, who's
Speaker 1: a father and a husband, is out riding his bicycle
Speaker 1: alone under the dim street lights. The night wind envelops him,
Speaker 1: just like the stress he can't shake off.
Speaker 2: He's working in state finance sector, which is experiencing a
Speaker 2: salary cap and you know his pay has just been
Speaker 2: cut by twenty percent at work, He's facing this uncertain future.
Speaker 2: Doesn't know when or how long he can hold his
Speaker 2: job for.
Speaker 1: Wu got into an argument with his wife after returning
Speaker 1: home late from work. She was frustrated teaching their six
Speaker 1: year old math, something Wu wasn't sure really mattered anymore.
Speaker 2: He's wondering, what is the point of pushing our kids
Speaker 2: so hard when jobs have become meaningless and efforts are
Speaker 2: no longer tied to your pay your salary.
Speaker 1: Lu lu Chin is Bloomberg's editor on Asia Investing. Her
Speaker 1: team talked to Wu, who didn't want us to record
Speaker 1: his voice, but was willing to share his frustrations. He
Speaker 1: told Bloomberg that the career turn he's now facing has
Speaker 1: upended the life he had planned for himself and his family.
Speaker 2: As a manager of a big state owned firm, he
Speaker 2: enjoyed a good lifestyle. His kids are in international school,
Speaker 2: which is the new homemark for upper middle class life
Speaker 2: in China. He also had the luxury car, and now
Speaker 2: all of that is being taken away.
Speaker 1: What's happening to Wu is part of a major policy
Speaker 1: shift underway in China, where President Shei Jinping is actively
Speaker 1: reshaping the world's second largest economy.
Speaker 2: The industries that are experiencing the most drastic changes include finance's, internet,
Speaker 2: and real estate. And these were all important growth drivers
Speaker 2: and job creators in the past, and now they're all
Speaker 2: cast to drift.
Speaker 1: That policy shift, along with the job losses and pay
Speaker 1: cuts it brings, is fueling an existential crisis among some
Speaker 1: of the best and the brightest workers in China.
Speaker 2: They no longer see the era of working long hours
Speaker 2: taking big risks. There's very little that they can do,
Speaker 2: which is why people are referring it to the garbage
Speaker 2: time in history.
Speaker 1: Welcome to The Big Take Asia from Bloomberg News. I'm Wanha.
Speaker 1: Every week we take you inside some of the world's
Speaker 1: biggest and most powerful economies and the markets tycoons and
Speaker 1: businesses that drive this ever shifting region. Today on the
Speaker 1: show How one of China's biggest policy shifts is leaving
Speaker 1: a generation of professionals feeling a drift, and what happens
Speaker 1: to a country when many of its brightest and most
Speaker 1: ambitious citizens have their dreams crushed. The sectors of the
Speaker 1: Chinese economy that the government now wants to rein in
Speaker 1: employ a huge number of people in China.
Speaker 2: There's two hundred million people who work in white collar jobs,
Speaker 2: and that's almost the population of Brazil if you broke
Speaker 2: it down by sector. Finance alone had eight million people
Speaker 2: property at its peak, if you include the supply chain
Speaker 2: and construction workers, that provided jobs to one hundred million people.
Speaker 1: Up until recently, these industries flourished with a strong labor
Speaker 1: force and robust foreign investments, and Lulu says they were
Speaker 1: part of an era where being rich was glorious and
Speaker 1: entrepreneurs were celebrated.
Speaker 2: It was an error where people like Jack mo for sure,
Speaker 2: was highly respected. He would go to conferences and young
Speaker 2: people would chase him across the venue, hoping to get
Speaker 2: a word of wisdom and learn about how he achieved
Speaker 2: success in life. Now that error is gone, it's no
Speaker 2: longer glorious to be rich.
Speaker 1: But now these industries have fallen out of favor in China,
Speaker 1: and President Xijinping has said he wants to move the
Speaker 1: country towards what he calls high quality growth golglen faja
Speaker 1: gog golglen faja. Bloomberg went through the speeches last year
Speaker 1: and found the phrase pop up at least one hundred
Speaker 1: and twenty eight times, nearly double dimensions in twenty twenty two.
Speaker 2: That is the new mantra right now, high quality growth,
Speaker 2: not high speed. So these industries, as finance, consumer, tech,
Speaker 2: and property are out of favor. I think you could
Speaker 2: say that the Communist Party has always been skeptical of finance,
Speaker 2: viewing it as a way to enrich a few people
Speaker 2: at the expense of the working class and fermenting instability
Speaker 2: that has marred the US. And even though it's communist routs,
Speaker 2: China has a high wealth disparity. A lot of policies
Speaker 2: are aimed at tackling those issues.
Speaker 1: So if she wants to shift resources and tension away
Speaker 1: from the banking and tech real estate sectors, where does
Speaker 1: he want to redirect these resources?
Speaker 2: To paging is dubbed the new threes, so it's evs,
Speaker 2: batteries and solar panels. Bloomberg Economics estimated that the proportion
Speaker 2: of GDP from these sectors will swell to twenty three percent.
Speaker 2: The high tech sector is also estimated to account for
Speaker 2: nineteen percent of GDP by twenty twenty six.
Speaker 1: As a result in the shift to high quality growth,
Speaker 1: many people have lost their jobs. In real estate alone,
Speaker 1: the collapse has tossed some half a million people out
Speaker 1: of work in the three years through twenty twenty three.
Speaker 1: That's according to data firm Korean Chiku. In the internet sector,
Speaker 1: Ali Baba alone shrunk their headcount by roughly twenty thousand
Speaker 1: last year, and Lulu says, even if you're lucky enough
Speaker 1: to keep your job, you might not be able to
Speaker 1: keep the same paycheck.
Speaker 2: Look at CCC, one of China's largest investment banks. They
Speaker 2: caught compensation for senior bankers by more than forty percent
Speaker 2: and also the staff have been told to avoid wearing
Speaker 2: luxury goods and no more business class.
Speaker 1: And some employees are even being asked to hand over
Speaker 1: money they were already paid.
Speaker 2: Yeah, some people have been told to pay back their bonuses.
Speaker 1: You basically have to give them back money that you've
Speaker 1: already earned and have probably already spent.
Speaker 2: Yes, yes, which is why people are selling their cars.
Speaker 1: Oh man, that must really hurt.
Speaker 2: Yeah.
Speaker 1: Lulu and her team talked to more than a dozen
Speaker 1: people across the growth sectors that had been high flying finance,
Speaker 1: tech and real estate. Many said they're now under mounting pressure.
Speaker 2: Many highlighted the stress that they felt brought on by
Speaker 2: these salary cuts, escalating scrutiny of expenses, also the sting
Speaker 2: of being shamed on social media were their affluent lifestyles.
Speaker 2: One of the people that we talked to Sharon's Howe,
Speaker 2: who is an executive at a mutual fund, and she
Speaker 2: also sold her car of Portia and she says that
Speaker 2: sleeping pills are her best friends these days.
Speaker 1: All of these changes, the job cuts, pay cuts, and
Speaker 1: the clawbacks are taking a toll on the mental health
Speaker 1: of many workers in China that was captured in a
Speaker 1: poll of sixty thousand.
Speaker 2: There was a recent poll by this consulting firm, tinancing Ly,
Speaker 2: and they found that anxiety and depression were some of
Speaker 2: the top concerns for people in China right now. Students
Speaker 2: and workers, and finance and tech were the majority of
Speaker 2: clients seeking mental health support.
Speaker 1: After the break. How will workers left behind manage as
Speaker 1: economy moves forward, and what will the labor disruption mean
Speaker 1: for the Chinese government. China's pivot from high speed growth
Speaker 1: to high quality growth has potentially left millions of people
Speaker 1: unemployed in the middle of their careers. But there are
Speaker 1: promises of growth in new sectors like evs and solar panels.
Speaker 1: So I wanted to know will the growth of these
Speaker 1: new sectors make up for the losses in other industries
Speaker 1: of the economy.
Speaker 2: It will create jobs, it will create growth, but it's
Speaker 2: probably not going to be jobs for this batch of people,
Speaker 2: this generation of people, because they're all in their mid
Speaker 2: thirties and forties. They're not in stem subjects that are
Speaker 2: needed for the high quality growth in chip industries that
Speaker 2: are in favor right now. So this generation of people,
Speaker 2: they face the danger of being cast a drift.
Speaker 1: And how difficult is it when white collar workers in
Speaker 1: their thirties and forties lose their jobs in China? Is
Speaker 1: there as big of a stigma that comes with job loss?
Speaker 2: The question is how are they going to reskill and
Speaker 2: is there enough time for them to ever find that
Speaker 2: opportunity to reskill Because in China, their job applications sometimes
Speaker 2: just blatantly say no older than thirty five years old,
Speaker 2: and for women it's even harsher. And age discrimination is
Speaker 2: even worse because the prospective employers also question whether they
Speaker 2: want to have a second kid or third kid.
Speaker 1: Last week, China approved a plan to gradually delay retirement,
Speaker 1: raising the retirement age for the first time since nineteen
Speaker 1: seventy eight, a move likely to anger workers who are
Speaker 1: already under stress.
Speaker 2: I think that's why you're seeing so much social media
Speaker 2: backlash after China announced that they were going to increase
Speaker 2: the retirement age. And you know, some people joke that
Speaker 2: if you can't even hold your job till thirty five,
Speaker 2: how are you going to hold it out till sixty?
Speaker 1: And Historically, a high unemployment rate often leads to political unrest.
Speaker 1: China's unemployment rate reached an all time high of thirty
Speaker 1: percent in nineteen eighty nine, the same year when the
Speaker 1: Tiananmen Square protests happened and the ensuing crackdown took place.
Speaker 1: So I asked Lulu, could this new round of job
Speaker 1: loss result in political instability, so.
Speaker 2: None of the people that we interviewed and financed plan
Speaker 2: to protest. That's the cases of descent increased eighteen percent
Speaker 2: in the second quarter compared with last year, and that
Speaker 2: was by a survey by China Descent Monitor, and out
Speaker 2: of those cases, most were related to economic issues and
Speaker 2: aggrieved homeowners. That said Patricia Kim from the John Thornton Center.
Speaker 2: She says that she's grip on power has not been
Speaker 2: dented by any of this, with.
Speaker 1: China's ironclad grip on security and surveillance technology, widespread demonstrations
Speaker 1: are out of the question. But some people are taking
Speaker 1: their frustrations to social media, and that's a place where
Speaker 1: you're seeing a particular phrase pop up, garbage time in.
Speaker 2: History, which is Alicia Alati is in garbage time of
Speaker 2: History describes as society where the laws of economics are
Speaker 2: violated and individuals have no power to make changes. Basically
Speaker 2: saying that nothing that you do is right, which you
Speaker 2: cannot invest, cannot spend, turn left, turn and.
Speaker 1: Right, everything is wrong. That sounds all really depressing.
Speaker 2: Yeah, I think it's like a more passive aggressive form
Speaker 2: of people trying to make sense of what's happening to
Speaker 2: them and turning all that negative energy into dark humor.
Speaker 1: And when the best and brightest and most ambitious citizens
Speaker 1: are feeling depressed or unmotivated, the ramifications for the economy
Speaker 1: could be huge. With salary cutbacks and potential job loss
Speaker 1: on the horizon, Lulu says, the sources Bloomberg spoke to
Speaker 1: are already cutting back on spending by doing things like
Speaker 1: dining out less.
Speaker 2: You know, you wonder, oh, why is China consumer spending
Speaker 2: not going up? That's the reason I think. Right now
Speaker 2: we're just starting to see the effects unfold. And part
Speaker 2: of the reason the consequences or the back clash hasn't
Speaker 2: been that strong, I think is because a lot of
Speaker 2: these people still have some household savings and they're slowly
Speaker 2: eating through that savings right now, and we haven't gotten
Speaker 2: to a point where where, you know, things are so
Speaker 2: dire they can no longer put food on their plates.
Speaker 2: And hopefully it never comes to that point and they
Speaker 2: can still find that transition to the next act too
Speaker 2: in their lives.
Speaker 1: In twenty nineteen, even before the economic downturn, the Chinese
Speaker 1: Academy of Social Sciences estimated that the urban pension fund
Speaker 1: would run dry by twenty thirty five because not enough
Speaker 1: people are working and paying into it. Fundamentally, Lulu says,
Speaker 1: what we're seeing now is a conflict of values, a
Speaker 1: clash of two generations of Chinese who hold very different worldviews.
Speaker 2: The battle is, you know it really it pits a
Speaker 2: generation of people who those worldviews were shaped during an
Speaker 2: era of reform and opening up versus a system that's
Speaker 2: reverting to its more rigid roots under sea and his cabinet,
Speaker 2: and these people spent their formative years during the more
Speaker 2: turbulent Cultural Revolution era, whereas his generation grew up in
Speaker 2: an era that first of all, benefited from China's reform
Speaker 2: and opening up. Many of them went overseas and were
Speaker 2: educated abroad. And that concept or that idea that China
Speaker 2: would become more integrated with the US, with the rest
Speaker 2: of the world, that was the norm. And now all
Speaker 2: of a sudden, all these beliefs are up in the air.
Speaker 2: One of my contacts asked me the other day, like,
Speaker 2: who is still happy in China right now?
Speaker 1: That's right, and I think about it.
Speaker 2: You know, the government officials are under a huge amount
Speaker 2: of pressure. The entrepreneurs are not motivated to invest capital.
Speaker 2: Right now, state owned enterprise workers are being capped off
Speaker 2: in salary. Your white collar workers working for foreign companies
Speaker 2: are are fearful of losing their jobs. Now the shift
Speaker 2: has left an entire generation of Chinese elites and previously
Speaker 2: prestigious jobs adrift. And you know, the mood has gotten
Speaker 2: so grim that many feel that they're living in the
Speaker 2: garbage time of history.
Speaker 1: And in the meantime, what's happened to Thomas Wu.
Speaker 2: Well, Thomas Wo has managed to find a group of
Speaker 2: people who are like him, who want to avoid their
Speaker 2: wives and I and now he has a cycling girl
Speaker 2: and avoiding at home. And so now he has a
Speaker 2: cycling group.
Speaker 1: I guess. I guess at least that's a little bit
Speaker 1: healthier than staying at home.
Speaker 2: I would say that most of these people that we
Speaker 2: interviewed are surprisingly resilient mentally. From Wu's point, his goal
Speaker 2: is to live healthy and be mentally stable and live
Speaker 2: another thirty years so he can see his child grow
Speaker 2: up and live an error where he considers to be
Speaker 2: more in line with his worldview.
Speaker 1: So he's really then, you know, living out this future
Speaker 1: for his children's future.
Speaker 2: That's right, And.
Speaker 1: I imagine hoping that somehow his children's future will be
Speaker 1: a lot brighter than.
Speaker 2: His question for debate?
Speaker 1: Is he hopeful question for debate? This is The Big
Speaker 1: Take Asia from Bloomberg News. I'm one High. This episode
Speaker 1: was produced by Young Young, Naomi mm and Jessica Beck.
Speaker 1: It was mixed by Blake Maples and fact checked by
Speaker 1: Eddie Dwan. It was edited by Caitlyn Kenny, Jeffrey Grocott,
Speaker 1: and Emily Cadman. Our senior editor is Elizabeth Ponso. Nicole
Speaker 1: Beemster Bower is our executive producer, and Sage Bowman is
Speaker 1: Bloomberg's head Podcasts. Please follow and review The Big Tick
Speaker 1: Asia wherever you listen to podcasts. It helps new listeners
Speaker 1: find the show. See you next time.