WEBVTT - China’s Crackdowns Are Crushing the Dreams of a Generation

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. It's one am and

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<v Speaker 1>the streets in Shanghai are relatively empty. Thomas Wu, who's

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<v Speaker 1>a father and a husband, is out riding his bicycle

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<v Speaker 1>alone under the dim street lights. The night wind envelops him,

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<v Speaker 1>just like the stress he can't shake off.

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<v Speaker 2>He's working in state finance sector, which is experiencing a

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<v Speaker 2>salary cap and you know his pay has just been

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<v Speaker 2>cut by twenty percent at work, He's facing this uncertain future.

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<v Speaker 2>Doesn't know when or how long he can hold his

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<v Speaker 2>job for.

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<v Speaker 1>Wu got into an argument with his wife after returning

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<v Speaker 1>home late from work. She was frustrated teaching their six

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<v Speaker 1>year old math, something Wu wasn't sure really mattered anymore.

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<v Speaker 2>He's wondering, what is the point of pushing our kids

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<v Speaker 2>so hard when jobs have become meaningless and efforts are

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<v Speaker 2>no longer tied to your pay your salary.

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<v Speaker 1>Lu lu Chin is Bloomberg's editor on Asia Investing. Her

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<v Speaker 1>team talked to Wu, who didn't want us to record

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<v Speaker 1>his voice, but was willing to share his frustrations. He

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<v Speaker 1>told Bloomberg that the career turn he's now facing has

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<v Speaker 1>upended the life he had planned for himself and his family.

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<v Speaker 2>As a manager of a big state owned firm, he

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<v Speaker 2>enjoyed a good lifestyle. His kids are in international school,

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<v Speaker 2>which is the new homemark for upper middle class life

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<v Speaker 2>in China. He also had the luxury car, and now

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<v Speaker 2>all of that is being taken away.

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<v Speaker 1>What's happening to Wu is part of a major policy

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<v Speaker 1>shift underway in China, where President Shei Jinping is actively

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<v Speaker 1>reshaping the world's second largest economy.

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<v Speaker 2>The industries that are experiencing the most drastic changes include finance's, internet,

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<v Speaker 2>and real estate. And these were all important growth drivers

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<v Speaker 2>and job creators in the past, and now they're all

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<v Speaker 2>cast to drift.

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<v Speaker 1>That policy shift, along with the job losses and pay

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<v Speaker 1>cuts it brings, is fueling an existential crisis among some

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<v Speaker 1>of the best and the brightest workers in China.

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<v Speaker 2>They no longer see the era of working long hours

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<v Speaker 2>taking big risks. There's very little that they can do,

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<v Speaker 2>which is why people are referring it to the garbage

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<v Speaker 2>time in history.

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<v Speaker 1>Welcome to The Big Take Asia from Bloomberg News. I'm Wanha.

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<v Speaker 1>Every week we take you inside some of the world's

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<v Speaker 1>biggest and most powerful economies and the markets tycoons and

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<v Speaker 1>businesses that drive this ever shifting region. Today on the

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<v Speaker 1>show How one of China's biggest policy shifts is leaving

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<v Speaker 1>a generation of professionals feeling a drift, and what happens

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<v Speaker 1>to a country when many of its brightest and most

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<v Speaker 1>ambitious citizens have their dreams crushed. The sectors of the

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<v Speaker 1>Chinese economy that the government now wants to rein in

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<v Speaker 1>employ a huge number of people in China.

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<v Speaker 2>There's two hundred million people who work in white collar jobs,

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<v Speaker 2>and that's almost the population of Brazil if you broke

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<v Speaker 2>it down by sector. Finance alone had eight million people

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<v Speaker 2>property at its peak, if you include the supply chain

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<v Speaker 2>and construction workers, that provided jobs to one hundred million people.

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<v Speaker 1>Up until recently, these industries flourished with a strong labor

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<v Speaker 1>force and robust foreign investments, and Lulu says they were

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<v Speaker 1>part of an era where being rich was glorious and

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<v Speaker 1>entrepreneurs were celebrated.

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<v Speaker 2>It was an error where people like Jack mo for sure,

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<v Speaker 2>was highly respected. He would go to conferences and young

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<v Speaker 2>people would chase him across the venue, hoping to get

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<v Speaker 2>a word of wisdom and learn about how he achieved

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<v Speaker 2>success in life. Now that error is gone, it's no

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<v Speaker 2>longer glorious to be rich.

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<v Speaker 1>But now these industries have fallen out of favor in China,

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<v Speaker 1>and President Xijinping has said he wants to move the

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<v Speaker 1>country towards what he calls high quality growth golglen faja

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<v Speaker 1>gog golglen faja. Bloomberg went through the speeches last year

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<v Speaker 1>and found the phrase pop up at least one hundred

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<v Speaker 1>and twenty eight times, nearly double dimensions in twenty twenty two.

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<v Speaker 2>That is the new mantra right now, high quality growth,

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<v Speaker 2>not high speed. So these industries, as finance, consumer, tech,

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<v Speaker 2>and property are out of favor. I think you could

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<v Speaker 2>say that the Communist Party has always been skeptical of finance,

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<v Speaker 2>viewing it as a way to enrich a few people

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<v Speaker 2>at the expense of the working class and fermenting instability

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<v Speaker 2>that has marred the US. And even though it's communist routs,

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<v Speaker 2>China has a high wealth disparity. A lot of policies

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<v Speaker 2>are aimed at tackling those issues.

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<v Speaker 1>So if she wants to shift resources and tension away

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<v Speaker 1>from the banking and tech real estate sectors, where does

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<v Speaker 1>he want to redirect these resources?

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<v Speaker 2>To paging is dubbed the new threes, so it's evs,

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<v Speaker 2>batteries and solar panels. Bloomberg Economics estimated that the proportion

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<v Speaker 2>of GDP from these sectors will swell to twenty three percent.

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<v Speaker 2>The high tech sector is also estimated to account for

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<v Speaker 2>nineteen percent of GDP by twenty twenty six.

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<v Speaker 1>As a result in the shift to high quality growth,

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<v Speaker 1>many people have lost their jobs. In real estate alone,

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<v Speaker 1>the collapse has tossed some half a million people out

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<v Speaker 1>of work in the three years through twenty twenty three.

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<v Speaker 1>That's according to data firm Korean Chiku. In the internet sector,

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<v Speaker 1>Ali Baba alone shrunk their headcount by roughly twenty thousand

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<v Speaker 1>last year, and Lulu says, even if you're lucky enough

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<v Speaker 1>to keep your job, you might not be able to

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<v Speaker 1>keep the same paycheck.

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<v Speaker 2>Look at CCC, one of China's largest investment banks. They

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<v Speaker 2>caught compensation for senior bankers by more than forty percent

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<v Speaker 2>and also the staff have been told to avoid wearing

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<v Speaker 2>luxury goods and no more business class.

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<v Speaker 1>And some employees are even being asked to hand over

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<v Speaker 1>money they were already paid.

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<v Speaker 2>Yeah, some people have been told to pay back their bonuses.

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<v Speaker 1>You basically have to give them back money that you've

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<v Speaker 1>already earned and have probably already spent.

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<v Speaker 2>Yes, yes, which is why people are selling their cars.

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<v Speaker 1>Oh man, that must really hurt.

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<v Speaker 2>Yeah.

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<v Speaker 1>Lulu and her team talked to more than a dozen

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<v Speaker 1>people across the growth sectors that had been high flying finance,

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<v Speaker 1>tech and real estate. Many said they're now under mounting pressure.

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<v Speaker 2>Many highlighted the stress that they felt brought on by

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<v Speaker 2>these salary cuts, escalating scrutiny of expenses, also the sting

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<v Speaker 2>of being shamed on social media were their affluent lifestyles.

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<v Speaker 2>One of the people that we talked to Sharon's Howe,

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<v Speaker 2>who is an executive at a mutual fund, and she

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<v Speaker 2>also sold her car of Portia and she says that

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<v Speaker 2>sleeping pills are her best friends these days.

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<v Speaker 1>All of these changes, the job cuts, pay cuts, and

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<v Speaker 1>the clawbacks are taking a toll on the mental health

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<v Speaker 1>of many workers in China that was captured in a

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<v Speaker 1>poll of sixty thousand.

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<v Speaker 2>There was a recent poll by this consulting firm, tinancing Ly,

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<v Speaker 2>and they found that anxiety and depression were some of

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<v Speaker 2>the top concerns for people in China right now. Students

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<v Speaker 2>and workers, and finance and tech were the majority of

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<v Speaker 2>clients seeking mental health support.

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<v Speaker 1>After the break. How will workers left behind manage as

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<v Speaker 1>economy moves forward, and what will the labor disruption mean

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<v Speaker 1>for the Chinese government. China's pivot from high speed growth

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<v Speaker 1>to high quality growth has potentially left millions of people

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<v Speaker 1>unemployed in the middle of their careers. But there are

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<v Speaker 1>promises of growth in new sectors like evs and solar panels.

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<v Speaker 1>So I wanted to know will the growth of these

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<v Speaker 1>new sectors make up for the losses in other industries

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<v Speaker 1>of the economy.

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<v Speaker 2>It will create jobs, it will create growth, but it's

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<v Speaker 2>probably not going to be jobs for this batch of people,

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<v Speaker 2>this generation of people, because they're all in their mid

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<v Speaker 2>thirties and forties. They're not in stem subjects that are

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<v Speaker 2>needed for the high quality growth in chip industries that

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<v Speaker 2>are in favor right now. So this generation of people,

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<v Speaker 2>they face the danger of being cast a drift.

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<v Speaker 1>And how difficult is it when white collar workers in

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<v Speaker 1>their thirties and forties lose their jobs in China? Is

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<v Speaker 1>there as big of a stigma that comes with job loss?

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<v Speaker 2>The question is how are they going to reskill and

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<v Speaker 2>is there enough time for them to ever find that

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<v Speaker 2>opportunity to reskill Because in China, their job applications sometimes

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<v Speaker 2>just blatantly say no older than thirty five years old,

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<v Speaker 2>and for women it's even harsher. And age discrimination is

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<v Speaker 2>even worse because the prospective employers also question whether they

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<v Speaker 2>want to have a second kid or third kid.

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<v Speaker 1>Last week, China approved a plan to gradually delay retirement,

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<v Speaker 1>raising the retirement age for the first time since nineteen

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<v Speaker 1>seventy eight, a move likely to anger workers who are

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<v Speaker 1>already under stress.

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<v Speaker 2>I think that's why you're seeing so much social media

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<v Speaker 2>backlash after China announced that they were going to increase

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<v Speaker 2>the retirement age. And you know, some people joke that

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<v Speaker 2>if you can't even hold your job till thirty five,

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<v Speaker 2>how are you going to hold it out till sixty?

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<v Speaker 1>And Historically, a high unemployment rate often leads to political unrest.

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<v Speaker 1>China's unemployment rate reached an all time high of thirty

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<v Speaker 1>percent in nineteen eighty nine, the same year when the

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<v Speaker 1>Tiananmen Square protests happened and the ensuing crackdown took place.

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<v Speaker 1>So I asked Lulu, could this new round of job

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<v Speaker 1>loss result in political instability, so.

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<v Speaker 2>None of the people that we interviewed and financed plan

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<v Speaker 2>to protest. That's the cases of descent increased eighteen percent

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<v Speaker 2>in the second quarter compared with last year, and that

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<v Speaker 2>was by a survey by China Descent Monitor, and out

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<v Speaker 2>of those cases, most were related to economic issues and

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<v Speaker 2>aggrieved homeowners. That said Patricia Kim from the John Thornton Center.

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<v Speaker 2>She says that she's grip on power has not been

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<v Speaker 2>dented by any of this, with.

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<v Speaker 1>China's ironclad grip on security and surveillance technology, widespread demonstrations

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<v Speaker 1>are out of the question. But some people are taking

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<v Speaker 1>their frustrations to social media, and that's a place where

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<v Speaker 1>you're seeing a particular phrase pop up, garbage time in.

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<v Speaker 2>History, which is Alicia Alati is in garbage time of

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<v Speaker 2>History describes as society where the laws of economics are

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<v Speaker 2>violated and individuals have no power to make changes. Basically

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<v Speaker 2>saying that nothing that you do is right, which you

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<v Speaker 2>cannot invest, cannot spend, turn left, turn and.

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<v Speaker 1>Right, everything is wrong. That sounds all really depressing.

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<v Speaker 2>Yeah, I think it's like a more passive aggressive form

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<v Speaker 2>of people trying to make sense of what's happening to

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<v Speaker 2>them and turning all that negative energy into dark humor.

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<v Speaker 1>And when the best and brightest and most ambitious citizens

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<v Speaker 1>are feeling depressed or unmotivated, the ramifications for the economy

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<v Speaker 1>could be huge. With salary cutbacks and potential job loss

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<v Speaker 1>on the horizon, Lulu says, the sources Bloomberg spoke to

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<v Speaker 1>are already cutting back on spending by doing things like

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<v Speaker 1>dining out less.

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<v Speaker 2>You know, you wonder, oh, why is China consumer spending

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<v Speaker 2>not going up? That's the reason I think. Right now

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<v Speaker 2>we're just starting to see the effects unfold. And part

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<v Speaker 2>of the reason the consequences or the back clash hasn't

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<v Speaker 2>been that strong, I think is because a lot of

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<v Speaker 2>these people still have some household savings and they're slowly

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<v Speaker 2>eating through that savings right now, and we haven't gotten

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<v Speaker 2>to a point where where, you know, things are so

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<v Speaker 2>dire they can no longer put food on their plates.

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<v Speaker 2>And hopefully it never comes to that point and they

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<v Speaker 2>can still find that transition to the next act too

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<v Speaker 2>in their lives.

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<v Speaker 1>In twenty nineteen, even before the economic downturn, the Chinese

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<v Speaker 1>Academy of Social Sciences estimated that the urban pension fund

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<v Speaker 1>would run dry by twenty thirty five because not enough

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<v Speaker 1>people are working and paying into it. Fundamentally, Lulu says,

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<v Speaker 1>what we're seeing now is a conflict of values, a

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<v Speaker 1>clash of two generations of Chinese who hold very different worldviews.

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<v Speaker 2>The battle is, you know it really it pits a

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<v Speaker 2>generation of people who those worldviews were shaped during an

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<v Speaker 2>era of reform and opening up versus a system that's

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<v Speaker 2>reverting to its more rigid roots under sea and his cabinet,

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<v Speaker 2>and these people spent their formative years during the more

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<v Speaker 2>turbulent Cultural Revolution era, whereas his generation grew up in

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<v Speaker 2>an era that first of all, benefited from China's reform

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<v Speaker 2>and opening up. Many of them went overseas and were

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<v Speaker 2>educated abroad. And that concept or that idea that China

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<v Speaker 2>would become more integrated with the US, with the rest

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<v Speaker 2>of the world, that was the norm. And now all

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<v Speaker 2>of a sudden, all these beliefs are up in the air.

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<v Speaker 2>One of my contacts asked me the other day, like,

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<v Speaker 2>who is still happy in China right now?

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<v Speaker 1>That's right, and I think about it.

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<v Speaker 2>You know, the government officials are under a huge amount

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<v Speaker 2>of pressure. The entrepreneurs are not motivated to invest capital.

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<v Speaker 2>Right now, state owned enterprise workers are being capped off

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<v Speaker 2>in salary. Your white collar workers working for foreign companies

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<v Speaker 2>are are fearful of losing their jobs. Now the shift

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<v Speaker 2>has left an entire generation of Chinese elites and previously

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<v Speaker 2>prestigious jobs adrift. And you know, the mood has gotten

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<v Speaker 2>so grim that many feel that they're living in the

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<v Speaker 2>garbage time of history.

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<v Speaker 1>And in the meantime, what's happened to Thomas Wu.

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<v Speaker 2>Well, Thomas Wo has managed to find a group of

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<v Speaker 2>people who are like him, who want to avoid their

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<v Speaker 2>wives and I and now he has a cycling girl

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<v Speaker 2>and avoiding at home. And so now he has a

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<v Speaker 2>cycling group.

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<v Speaker 1>I guess. I guess at least that's a little bit

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<v Speaker 1>healthier than staying at home.

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<v Speaker 2>I would say that most of these people that we

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<v Speaker 2>interviewed are surprisingly resilient mentally. From Wu's point, his goal

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<v Speaker 2>is to live healthy and be mentally stable and live

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<v Speaker 2>another thirty years so he can see his child grow

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<v Speaker 2>up and live an error where he considers to be

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<v Speaker 2>more in line with his worldview.

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<v Speaker 1>So he's really then, you know, living out this future

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<v Speaker 1>for his children's future.

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<v Speaker 2>That's right, And.

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<v Speaker 1>I imagine hoping that somehow his children's future will be

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<v Speaker 1>a lot brighter than.

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<v Speaker 2>His question for debate?

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<v Speaker 1>Is he hopeful question for debate? This is The Big

0:16:38.080 --> 0:16:41.920
<v Speaker 1>Take Asia from Bloomberg News. I'm one High. This episode

0:16:42.040 --> 0:16:45.160
<v Speaker 1>was produced by Young Young, Naomi mm and Jessica Beck.

0:16:45.600 --> 0:16:48.160
<v Speaker 1>It was mixed by Blake Maples and fact checked by

0:16:48.240 --> 0:16:51.680
<v Speaker 1>Eddie Dwan. It was edited by Caitlyn Kenny, Jeffrey Grocott,

0:16:51.720 --> 0:16:56.040
<v Speaker 1>and Emily Cadman. Our senior editor is Elizabeth Ponso. Nicole

0:16:56.160 --> 0:16:59.240
<v Speaker 1>Beemster Bower is our executive producer, and Sage Bowman is

0:16:59.240 --> 0:17:03.040
<v Speaker 1>Bloomberg's head Podcasts. Please follow and review The Big Tick

0:17:03.120 --> 0:17:06.400
<v Speaker 1>Asia wherever you listen to podcasts. It helps new listeners

0:17:06.440 --> 0:17:08.280
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