Like many Chinese people, Jackie had hoped to earn enough money to buy an apartment in a big city by investing in the Chinese stock market. However, he lost $30,000 in 2015 and $80,000 in 2021. He then closed his trading account and started investing in Chinese funds that tracked US stocks.
These are dangerous times for Chinese investors. Their flagship Chinese companies’ so-called A shares fell more than 11% in 2023, and losses have continued this year. Many investors are instead flocking to exchange-traded funds, which track overseas markets and perform much better.
Investing money in stocks inherently involves risk. But Chinese investors are experiencing particularly alarming developments, including financial losses in the market, falling home values and a government unwilling to publicly discuss what is happening.
As frustration mounts, Chinese investors have recently found a way to vent that isn’t immediately censored. They began leaving comments on innocuous posts about giraffe conservation on the official social media Weibo account of the U.S. Embassy in China. They lamented the poor performance of their portfolios, revealing widespread despair, anger and frustration. Kirin’s post has been liked nearly 1 million times since February 2, far exceeding the number that the embassy’s Weibo posts typically receive. Many of the comments expressed not only admiration for the United States but also dissatisfaction with their own country.
“The difference in stock market performance reflects the distance between the United States and China in terms of national power, technology, humanity, and well-being,” the commenter wrote.
These comments indicate that the Chinese public has increasingly less confidence in the stock market, the country’s economic outlook, and the Chinese Communist Party’s ability to govern.
“Their reaction is more than just losing money in the market,” said manufacturing analyst Jackie. Jackie earns half what she earned two years ago and works multiple jobs. “Maybe that venting is an outlet for frustrations that have built up in life.”
Another investor I spoke with, Leo, is a portfolio manager at an asset management company in Beijing and has been investing in China’s stock market for nearly a decade. In November he began closing out positions. Now, like Jackie, he is betting on overseas markets.
Mr. Leo said he expected Chinese internet giants Alibaba and Tencent to become trillion-dollar companies like Amazon, and for investors like him to benefit from that growth. The government’s crackdown on technology products in 2020 “shattered that dream,” he said. “Right now, we can only turn our attention to overseas markets.”
The U.S. embassy’s Weibo comments section once served as an online punching bag for nationalistic Chinese people who blame the United States for their country’s problems. Currently, it is called the Western Wall of Chinese A-share investors.
“Kirin is 10,000 times happier than Chinese stock investors under the protection of the US government,” one commenter wrote.
In a tightly controlled society like China, it is rare for national sentiment to be expressed so clearly. The comments could also be a harbinger of things to come if the economy doesn’t recover soon. Despite being bombarded with propaganda and threatened by the government, people may continue to question the government and find creative ways to express their dissatisfaction.
It has always been difficult to gauge public sentiment in China. People don’t have the courage to publicly say anything critical about their government. Even critical comments about the economy are now censored and punished. That’s why both Jackie and Leo asked me to only use their English names for fear of retaliation.
Still, online outrage by large groups of people could provide clues about national sentiment. Consider, for example, the grief that followed the death of Li Wenliang, a doctor who blew the whistle at the beginning of the pandemic. And the sudden death last year of former Premier Li Keqiang, a reformist politician who achieved little under the country’s leader, Xi Jinping, prompted widespread mourning.
These episodes showed that the public disagrees with the censorship and has doubts about the direction Mr. Xi is taking the country. The comments on his Weibo account of the US Embassy belong to this category.
Valuable insights into what people are feeling can emerge in unexpected places. A recent survey by the Guangzhou Public Opinion Research Center reveals a bleak picture of the southern city of Guangzhou, a metropolis of nearly 19 million people and a hub for technology, manufacturing and trade. In a 2023 survey of 1,000 residents, the center found that the city’s “economy and society are facing unprecedented challenges and pressures.”
Unemployment and declining incomes mean residents’ evaluation of the economy is as low as it was in 2015, when China’s market crashed, according to the research center’s report. Satisfaction with private sector growth fell below 30%, the lowest level since the question was first asked in 2008. Most residents said they did not expect their incomes to improve in 2024, and more than 20% said they believed their incomes would improve.They were “likely” to lose their jobs.
Media coverage of the investigation has been censored and the report cannot be found on the center’s website.
This finding will come as no surprise to investors.
Jackie, who is in her mid-30s, lost her job at a private equity firm in 2022. When he returned to manufacturing he was forced to take a significant pay cut. He is worried that he is “about to fall off a cliff.”
Born in Beijing in the mid-1980s, Leo said she grew up as a nationalistic “little pink.” He said the first crack in his confidence came in 2021 when the government went after internet companies. The second rift appeared when the government abruptly ended its “zero coronavirus” policy in December 2022 without preparing an effective vaccine or treatment for the population. And in late July, markets and the private sector did not respond to government economic stimulus.
Leo’s changes are noticeable. He said his fellow Beijing locals and those he went to high school with are among the most ardent supporters of Communist Party rule, as they have benefited from the city’s expansion and the country’s growth. Ta.
When a group of Leo’s classmates got together in June, he said they couldn’t believe that two of them, a couple, would immigrate to Canada. When they met again last month, he discovered that some of his classmates had opened bank accounts in Hong Kong. Unlike the mainland, Hong Kong has banks that are connected to the global financial system. They asked him how to convert their RMB savings into US dollars and send them to Hong Kong.
“They’re preparing for the worst-case scenario,” he said. “No one laughed at our two classmates who immigrated to Canada anymore. In fact, we are jealous of them.”
I asked Leo what needs to change to invest in the A-share market again.
He said the major problems that led to the flight remained unresolved, including a failed real estate sector, high local government debt and a rapidly aging population.
He said he wants the government to loosen its grip on private companies and disband Communist Party branches that have proliferated within them, and hopes the private sector will start investing again. Until then, it plans to keep its funds away from the Chinese market.
And what investment advice would he give his family and friends? “Run as fast as you can, even if you get lost,” he said.