Name: President Xi's New Economic Plans Spark A Crisis for China's Best-Paid Workers
Uploaded: 2024-09-19T03:11:43.000Z
Duration: 3 min 54 s
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I see investing in China as largely a very attractively priced place that now has a lot of questions regarding the issues that I've just referred to.

In other words, the economic issues and the political issues regarding property rights and whether it's still glorious to be rich and how that'll work.

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Therefore, there's a small percentage of our portfolio which is in China and will stay in China through this process.

That was Bridgewater Associates founder Ray Dalio speaking to us earlier about China's markets and this idea of whether it's still glorious to be rich.

That was at the Milken Institute Asia Summit in Singapore.

Well President Xi Jinping's decision to reshape the world's second largest economy has upended the lives of millions of ambitious Chinese professionals.

We're talking about high paying industries including finance, consumer technology, property now out of favour.

For more on today's Big Take story, let's bring in Bloomberg Senior Editor for Asia Finance David Scarland.

David, for so many years, the party's power was really dependent on the social contract of delivering prosperity and wealth to these workers.

What is the goal here in this policy shift?

Yeah, it certainly has been a shift Heidi and kudos to our colleagues in Hong Kong and in China for delivering such an excellent piece.

Really what we're seeing is that the sort of the three pillars of the economy over the last 10, 20 years, think finance, think real estate, think consumer tech, Alibaba, Tencent.

These are the people that really drove the economy.

And they were sort of the creme de la creme of China that has been really turned on its head in the last few years.

As you mentioned, Xi Jinping is really overhauling the economy.

And they're really getting hit on all sides.

We're talking tens of millions of people who are worried about pay cuts.

They're losing a lot of the perks that they got used to, business travel, forget it.

We had some tremendous sort of comments, anecdotes from people who are really feeling the pinch right now.

We had insurance executive who said he feels like his work is meaningless.

Another broker said that the finance sector feels like rats on the street because they're just so undervalued now.

So it's just a dramatic turn from what it was for years, where this was the driving force of the economy.

And we're talking here about the most educated, the best and brightest of Chinese society.

I cannot imagine the long-term effect being good for the Chinese economy here.

So much about spending is around confidence, and if you don't feel confident in your job and in your prospects, you're still not going to buy a house, and that's why we're seeing such a slow rebound in real estate.

You're not going to spend period, and we're seeing that in retail sales.

We're seeing some of the weakest months since the pandemic over the last couple of weeks, so the last couple of months.

So there's just not a lot of consumer confidence, and that's playing out in the economy.

We've had a number of revisions from the big banks, UBS, et cetera, are saying China's probably not going to reach that 5% target this year, 4%, 4.5%.

And this really continues a steady grind down that we've seen for almost two decades.

The days of double-digit growth in China are just long gone.

Bloomberg Senior Editor for Asia Finance David Scanlon there, and this is really a good read, so take a look at that full story on today's Big Take.

 You can go to the terminal or head to Bloomberg.com.