Why you should care
A generation that grew up in wealth is now seeing the impact of an economic slowdown in China.
One recent evening at sunset, Tao Jiali went to the rooftop of the tech company where she works, eight stories above the highways of Hangzhou. A low guardrail separates the roof from the hazy skyline. “That’s where employees go to take selfies before they’re laid off,” she says.
In recent months her employer, NetEase, has suffered from the same wave of redundancies that has hit the rest of China’s internet sector as the industry slows. Two months ago, Tao was told by her supervisor that she would lose her job too — but that decision was suddenly reversed. She had just started breastfeeding her newborn daughter, a period when employees enjoy special protections under Chinese labor law.
That time is up in three months, she says. After that her future feels uncertain. “I don’t know how to plan. I might as well take the photos now,” she says.
Tao joined NetEase two years ago, her fourth job after moving from company to company for ever-higher salaries, a normal practice in Chinese tech: According to data from LinkedIn, the average tenure is 18 months. At the time she was hired, companies were expanding rapidly. Interviews were pro forma, she says. Now she faces the prospect of looking for work in a downturn. She also worries that she’ll be considered an undesirable potential employee: a married woman who might get pregnant.
The middle classes haven’t changed their mindset yet.
Li Chunling, researcher, Institute of Sociology of the Chinese Academy of Social Sciences
“Overall, we’re very fortunate,” she says of herself and her husband, also a high-earning tech employee. “It’s just that there are a lot of fragments of life we have to worry about.”
Indeed, she and her husband have a joint annual income of $72,700, putting them in the top 10 percent of Chinese earners. Between their parents and her husband, they own four houses. Their parents live near them and can help with childcare. They have access to a local hukou, or household registration, that gives them access to schooling and social security benefits.
But Tao still feels far from secure. She and her husband save $1,440-$2,880 per month, but her aim of buying a house feels distant. She worries about getting her daughter, Juanjuan, into a primary school that stands a chance of placing her in a good lower-secondary school, which means better odds of a good upper-secondary and university education.
Those are the typical anxieties of a young Chinese professional family. “When I was pregnant with Juanjuan, I thought about enrolling her in a ballet class when she was older,” Tao says. “I thought I was being so advanced. Then I found out all the other mothers had already thought about it.”
Tao’s situation is partly the consequence of structural shifts in China’s society over the past three decades, since privatization started in earnest. This insecurity is described by Chinese commentators as arising from growing inequality coupled with falling social mobility — known as “class solidification.” But Tao is also bearing the costs of the economic slowdown brewing since 2010. While annual GDP growth of more than 6 percent is higher than Western countries, it is much lower than many Chinese businesses and households have grown used to.
The government drew on banks to provide heavy lending during the boom years but is now trying to cut back. The authorities are dealing with the consequences of abundant loans that ended up fueling unprofitable ventures, dodgy consumer-lending schemes and property prices.
As a result, many tech companies are growing but laying off workers. Investments still garner returns, but millions of individuals, including Tao, lost savings in the bursting of the peer-to-peer lending bubble. House prices in big cities have gone from rapid growth to stability, but only because of government restrictions on house purchases that have irritated owners and would-be buyers.
Mismatched expectations are at the heart of Tao’s anxieties. “First-generation middle classes generally have stronger material desires, they want to chase a higher goal and have more motivation,” says Li Chunling, a researcher at the Chinese Academy of Social Sciences. Unlike the past, Li says, living standards may now ”be stagnant or even drop.” But, Li cautions, ”the middle classes haven’t changed their mindset yet.”
Eating dinner with her parents, Tao spoons imported fruit puree, which costs $4 per packet, into Juanjuan’s mouth. “It’s more expensive so it’s more safe,” Tao says. Her fears stem from China’s baby-milk food safety scandal in 2008, when thousands of babies were hospitalized and some died after drinking contaminated formula.
Tao’s mother, who was born in 1957, smiles: “Things were much simpler when I gave birth to Jiali. We didn’t think about any of these things. I fed her rice porridge long before I should have, but nobody knew better back then.”
Tao’s parents, who were born into a China of almost uniform poverty and witnessed unimaginable economic growth, belong to an optimistic generation. Tao’s generation has lived through a boom followed by a slowdown in their adulthood. “It’s easy to go from frugality to luxury, but difficult to go from luxury to frugality,” Tao says.
The “iron rice bowl” welfare state that fed Tao’s parents has also been taken off the table. Despite being socialist in name, China provides basic employment and medical insurance. The rule of law itself is haphazard, adding an edge of uncertainty to everyday challenges.
“My husband is rarely angry, but I once saw him yell at an old man from road rage,” Tao says. “I scolded him for it. What if the old man had a heart attack and needed to be hospitalized? We’d have to pay for his fees.”
Competitive pressure to get into top schools is so great that the best schools interview parents and ask for curricula vitae from 11-year-olds. The 14-page CV of a 5-year-old in Shanghai went viral recently. He cited achievements such as “reading over 500 English books a year.”
“The allocation of educational resources is extremely uneven,” says Guo Bin, professor of management at Zhejiang University. “There are huge differences even within big cities.”
We walk past Tao’s dream primary school for her daughter. She plans to enroll Juanjuan in English classes from the age of 2 or 3, as well as ballet and other activities that can add to her CV. “So much pressure,” she jokes, stroking Juanjuan’s feathery head, “her hair is already falling out.”
On Saturday, Tao’s husband is still at work. Tao laughs, calling it “more than 996” (9 am to 9 pm, six days a week). The number 996 recently became a buzzword after a movement of tech workers started a campaign against long working hours. Jack Ma, Alibaba’s boss, opposed it, saying that long hours were a “blessing” and a test of strength.
An ethic of hard work has long been part of China’s image, both at home and abroad. But Ma’s words seem out of date now. In the past two years, stories have gone viral on social media of young professionals getting sick or even dying because of working overtime. But plenty of the country’s brightest young people put up with the 996 regime, worried that an opportunity may be closing.
“Everyone feels that class solidification is coming, but it has not completely happened,” says Wang Wen, executive dean of the Chongyang Institute for Financial Studies at Renmin University. “Everyone thinks that they still have the opportunity to get out of their own class.” That’s different from developed countries, he argues, where families have a lower expectation of class mobility.
With her husband busy, Tao and her parents take Juanjuan to Hangzhou’s zoo, by the West Lake that Marco Polo visited in the late 13th century, when he declared city the finest in the world.
“I’m nostalgic about the city before the tech giants came,” says Tao, acknowledging the irony in saying so given her own career. “The city has grown and so have our ambitions.”
Tao and her mother say that they only noticed competitive pressure in their own lives when Tao entered high school, in the early 2000s. Academics echo this point, saying that the increasing emphasis on competition coincided with the marketization of the Chinese economy after it acceded to the World Trade Organization in 2001. “When there is a huge gap between high expectations and relatively low possibilities, there comes social anxiety,” says Wang.
On a recent vacation in the U.S., Tao considered immigrating there. She dropped the idea quickly, after thinking she wouldn’t find work easily.
Her husband, on the other hand, has different reasons for staying put: “Look at China’s technology sector. China will overtake the U.S., so it’s best for Juanjuan to grow up here,” he says.
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