The anxiety rattling China’s youth

So those are really kind of quick things that you can buy that doesn't cost a lot but makes you feel really satisfied for a bit until you know the next fixing is needed.

I would say it's very different from 20 years ago when I first came to Beijing to work. You know, back then we were talking about what our Chinese consumers buying. It's the new middle class. You know, what kind of cars are they buying for the first time? What kind of luxury goods are they binging on? We even went to training schools for butlers because there's so many wealthy people. Now. I would say consumers are a bit more reserved, deflated. I mean, one economist even described them as depressed because youth unemployment is very high. And even those people who have a job, wages aren't rising. And homeowners, and that's the majority of households, they're feeling a lot poorer because property prices have been dropping for four years plus.

Sure. This system was adopted from the Soviet Union when China's economy was planned, and this was a goal for everyone to work towards. Now, these days, China's economy is much more mixed, but the state still, still plays a very big role in it. So these GDP targets, as well as the key sectors it lists, are really signals for entrepreneurs and investors to know where to put their money at. Because guess what, if China's government says, hey, we're into green energy, if you bring a project on oil and gas, maybe you're not going to get speedy approvals. Same time, it's also a signal for normal people to know what to expect next.

Almost always. I mean, except for 2022. Yeah, except for 2022, when there was a. There were really severe lockdowns during COVID But usually when China sets a target, it hits it. Now, how it does this is once it announces this goal, everyone moves in lockstep to try to achieve this goal. And let's say it's fall. The government will then come up with something to juice the economy. Like when consumption was faltering. They came up with a program that's sort of like the cash for clunkers, which is essentially like 15, 20% discount subsidized by the government to upgrade your old fridges or your cell phones. There is of course, a lot of debate about the reliability of Chinese data and also whether GDP is really a good measure of economic activity. Because an economics professor, David Lee from Tsinghua University, once told me, there's a classic joke in China where a local will come and say, let's build a road. The next official comes along and says, no, I don't like it. I don't like how it's built. Like, let's redo it. And every step of the way, that counts towards gdp, but it doesn't necessarily add value.

It's very much a two track economy. So domestically, like I mentioned, consumption is a bit sluggish, but exports, they're booming. China's not just manufacturing small goods, it's also manufacturing, you know, very high tech products, drones, cars. So somehow, despite all of the tit for tat tariffs with the US, China's trade surplus still hit a record $1.2 trillion last year. Now the International Monetary Fund says China cannot keep relying on exports to drive economy because it says its trading partners, they're really being hurt by this. We've seen the US and Europe for example, really hammering hard at Chinese exporters. The IMF though has very much encouraged China recently to prioritize consumption led growth. But like we said, it's very difficult because you know, when I was speaking to young people, whether they're in Beijing or Shanghai, without prompting, they bring up the fact that they're either not thinking about marriage or, or they don't want to get married or have a family. And that by extension means that they're not going to be looking for the apartments near the good school. It means they're not going to furnish that apartment with household appliances and furniture. They might not even get a car.

Yeah, I mean in the past, like decades ago, we were looking at double digit growth, but in the last five years, I'd say it's more about 5%.

Well, okay, so remember we go back to how the economy is mixed and they need to set a goal. So this goal kind of works towards a target of 2035. That's when President Xi Jinping says China needs to achieve socialist modernization. It sounds super vague, but state media have actually put a number to it. They're going to have to grow on average over 4% a year. So this is something that China has to fulfill because that's how they gain their legitimacy from the populace without elections.

This is going to be an economic blueprint for China's economy until 2030. It comes down to two things. China's going to double down on industrial manufacturing and also tech innovation, especially when it comes to self sufficiency, because tensions with the US has shown that, you know, the US wants to cut off their semiconductors and high end technology from it, so it needs to rely on its own. Now, that's very good for the national security part of China. But the big question that I have is what does that mean for jobs? Because those two industries are not creating human jobs. And honestly, when I talk to people on the street, job anxiety is, you know, at the top of their list of anxiety. And by the way, it's not, it's not a lack of jobs in China. It's really the jobs that pay well. Okay, that's lacking. So this year we're looking at another record 12 million graduates. That's going to be very tough. They're looking at double digit unemployment rates and they're being now told, hey, you should be happy with a mediocre job and maybe you can even go back to the factories.

Sure. In Chinese it's called tangping, which literally means laying flat. But I have to say I think it's a mischaracterization because the average work week in China is still, I think, what is that, like 48 hours a week? That's well above, I think in the US it's like 34 hours. Okay. So while people say they are tang pinging or laying flat, really, it might mean I'm not gonna do 12 hours a day. I might do 10 hours a day.

Oh, absolutely. Thank you so much. This is fun.