AUCKLAND—
Mr. Wang lives in Shenzhen. He used to work for a business travel platform but was laid off at the beginning of this year. Mr. Wang told VOA that everything was like a high-speed train that suddenly braked. Those who were standing fell down, and those who were sitting almost fell to the ground. They were all stunned.
Many interviewees said that they had not expected the Chinese economy to slam on the brakes so hard and stall for so long, and the suffering they suffered and the impact on their families.
From the grassroots to blue-collar, white-collar and even gold-collar workers, all have become victims of China’s economic recession, and emergencies and extreme events caused by unemployment and wage cuts are also increasing rapidly. Analysts believe that the Third Plenary Session of the 20th CPC Central Committee does not seem to have come up with effective solutions, and the pressure will be transmitted to the social level at any time. The CPC will face greater challenges in maintaining stability, and the third term of Xi Jinping, the top leader of the CPC, will face more hidden dangers and crises.
The fatal three-piece set of middle-class poverty
Mr. Wang, who is in his early 40s and currently unemployed, lives in Shenzhen. He told VOA that the glory days seemed like yesterday, but changes have come too fast: “In the field of business travel software, our company is ranked among the top in China in terms of both R&D and sales, and is also one of the top 500 private enterprises in China. But now many companies are out of money, and our sales have plummeted. Finally, layoffs have fallen on our group of old employees.”
He said that he could no longer afford to raise his children in middle age: “Because my income was quite high before, I sent my two children to study in an international school in Thailand, and their mother was responsible for accompanying them. The living expenses there are cheap, and the tuition is about half of the same private school in China. But now I don’t have a job, and the tuition is not cheap no matter how I look at it. I am considering whether to bring the children back to China to study, but the children like it very much and adapt to life in Thailand, so I am very conflicted now.”
Mr. Wang said that the news of a female employee of CICC jumping off a building after receiving a pay cut in early July touched him deeply and he felt sympathy for her. “Of course, I wouldn’t jump off a building. I didn’t use more than 10 million RMB leverage to buy a luxury house, and I had some savings and investments before, so I’ll take it easy.” He used two methods to relieve his anxiety: “One is to drink a little wine, and the other is to chat with his ex-girlfriend to find comfort.”
Mr. Liu from Guangzhou is also thankful that he did not go into leverage. In the past two years, he was laid off by two large companies as an IT worker. Now his second child has just turned two years old, and his wife has been diagnosed with early breast cancer. His life has become bleak: “When I was laid off for the first time, I received a pretty good severance pay because I had worked for a long time. Later, I joined a large company, but was laid off again. I felt that I was unlucky at the time. Fortunately, we don’t have too much debt. We bought a small three-bedroom house in the suburbs of Guangzhou for more than 2 million yuan.”
The plight of the middle class is far from an isolated case. According to an analysis of the annual reports of 23 top Chinese companies by Hong Kong media, 14 companies laid off employees in 2023. The most prominent ones are Poly Real Estate, which laid off 16.3% of its employees, or 11,000 people, in the past year; Shanghai-based real estate company Greenland Holdings also reduced its number of employees by 14.5%, nearly 60,000 people; Alibaba laid off 12.8% of its employees in fiscal 2023, about 20,000 jobs.
The situation continues to deteriorate in 2024. Tencent’s employee count fell by 2.8% in 2023, or about 3,000 people. In the first quarter of 2024, the company laid off another 630 people. In addition, ByteDance, JD.com, Kuaishou, Didi Chuxing, Bilibili and Weibo have all launched layoff plans.
Ms. Chen Yingxuan, a policy analyst at the Taiwan Institute for National Defense and Security Research, who has been analyzing and assessing China’s employment situation for a long time, said in an interview with VOA reporters that the urban unemployment rate in June released by China’s National Bureau of Statistics fell by 0.2% compared with the same period last year, but Chinese netizens did not seem to buy into these data.
She introduced that in the past, discussions about unemployment in China mainly focused on recent graduates and the working class, but recently it has been discovered that the middle class or senior managers are also facing salary cuts or layoffs. For example, funds, securities companies and banks have all reported that employees’ salaries have been cut to “reduce costs and increase efficiency.” Even the partners of the Big Four accounting firms will begin to cut salaries in August.
“The three things that will cause the middle class to fall back into poverty – a mortgage of over 10 million, a spouse who doesn’t work, and the second child going to school abroad – have become a hot topic of discussion recently. The falling price of Moutai and the fall of Zhong Xue Gao from the altar also prove that the middle class’s purchasing power is no longer there,” said Chen Yingxuan.
“Party media belong to the party and cut salaries for the party”
People who had relatively stable incomes in the past also felt that their jobs were beginning to rust in 2024.
Ms. Luo, a party media practitioner working in Guangdong, told VOA that the media industry has lost its voice:
“From the provincial party committee’s official newspaper to the prefecture-level city party committee’s official newspaper, generally speaking, they have a stable income, but now they are also cutting salaries. Some newspapers and journals under the newspaper group are even worse off. Whether they have a staff or not, it is common for them to receive a third to half less in salary.”
Despite the dissatisfaction, she said that media professionals do not have many choices:
“Even though we get less money, we still have to attend fewer meetings and study more ideological and political education because the leaders are afraid of chaos. But the party media belongs to the party and we have already received what we should have received. There is nothing we can do about it now that it is less. People like me who have a regular job are thinking about retiring early, while young people who don’t have a regular job either have to endure the hardship or find another way out. Businesses are not doing well now, and they pay very little to reporters for travel expenses and public relations fees.”
Many media people told VOA that they are quite dissatisfied with the current situation. The CCP is too strict and too broad, and the leaders of the units are self-castrated. They work under great pressure. Their salaries are not high to begin with, and they are still being reduced. Some media people especially said that the Chinese Communist Party thinks it is good at propaganda, so it just controls everything and raises the salaries of all media people.
Bank employees are also looking forward to retirement. Ms. Zhang, who works at a state-owned commercial bank in Guangzhou, said that salary cuts are common in 2024:
“Salaries at state-owned banks like CCB and ABC, or joint-stock banks, are all being cut, not to mention city commercial banks in many places. Salaries were actually falling last year, and this year they are expected to fall even more. The exact extent of the reduction will have to wait until the end of the year, because it depends on the full-year performance. I estimate that the reduction is 20% to 30% at most.”
She told VOA: “There is no specific document or even written notice for salary cuts, at least people at my level can’t see any documents. They just cut it when they say so, and they cut it by a certain amount. For old workers like us in our early 50s, there is no way we can be competitive. We just have to hold on until we retire.”
Ms. Zhang’s suffering is real and urgent. Most of the leading companies in China’s financial industry are state-owned. In order to cope with the economic downturn, banks, securities companies and fund companies mainly cut salaries and benefits rather than large-scale layoffs. According to media reports, China International Capital Corporation reduced its employee-related costs by 43.4% in the first quarter of 2024 compared with the same period last year, and the reduction in basic wages reached up to 25%. At the same time, the labor costs of other leading securities companies such as CITIC Securities, CITIC Construction Investment, and Guotai Junan have all declined.
Civil servants are also living a tight life. The top leaders of the Communist Party of China require central ministries and local party and government agencies to get used to a tight life. The news of salary cuts for many local civil servants has been the focus of the media from time to time. According to information compiled by China’s official media, as of July 2024, all 31 provincial-level administrative regions in China have issued regulations on “living a tight life” for party and government agencies, focusing on budget cuts and reducing public expenditures. Among them, measures such as rectifying public travel and illegal car allocation and use have actually squeezed out a lot of hidden benefits.
Frequent extreme events lead to crises after hidden dangers
China’s unemployment and wage cuts are leading to more and more extreme incidents. The two most recent cases were the assassination of an American in Jilin and a Japanese in Suzhou in June. According to the limited information disclosed by Chinese officials, the suspects were all unemployed people.
In particular, in the Suzhou case, the suspect was a 53-year-old “unemployed person who recently came to Suzhou from other places.” This information shows that even in economically prosperous places, it is not so easy to find a job in a short period of time. Ms. Hu Youping, who bravely stood up for justice in the Suzhou case, has also had an unstable job in recent years. She worked as a micro-business for a short period of time and later as a cleaner. Before her death, she was a labor contract worker dispatched by a third-party labor company to a school bus company, with a monthly salary of about RMB 3,500.
Talking about these two extreme cases, Ms. Chen Yingxuan said: “Most of the recent indiscriminate murderers are middle-aged men in their 50s, but there is no further information due to the official cover-up of the detailed background, so it is difficult to directly conclude that it is extreme behavior caused by unemployment. However, what is certain is that under the tense atmosphere, Chinese society is like a pressure cooker that may explode at any time, and extreme incidents will continue to emerge in the future.”
The non-governmental organization China Labor Bulletin has long been concerned about the living conditions of Chinese workers. According to data collected by the organization, from January to July 2024, Chinese workers launched 1,196 collective actions to protest against wage cuts, wage arrears, layoffs without warning and unfair compensation. This figure increased by 52% over the same period in 2023, and doubled compared with the data of the three years of COVID-19 control.
The agency’s official website emphasizes that “the recorded events only cover about 5% to 10% of all collective actions by workers”, which means that Chinese workers’ rights protection actions reached 11,960-23,920 times from January to July 2024. The collective actions from January to July covered all provincial administrative regions except Tibet, among which Guangdong, Shandong, Henan, Hebei, Liaoning and Zhejiang were particularly prominent.
Wang Weike, secretary general of the Asian Public Culture Association, told VOA: “A high unemployment rate will definitely lead to social instability. The same is true when combined with Taiwan’s experience. Especially in mainland China, where the population is large and the unemployment rate is high, it is difficult to avoid the frequent occurrence of extreme events. Whether it is blue-collar, white-collar, or even gold-collar workers, the economic losses are now huge. The worse the economy, the more emergencies there are, and the Communist Party will use high pressure to suppress them. This is a vicious cycle, the people will suffer more, and the cost of maintaining stability will be higher.”
Ms. Chen Yingxuan said: “Salary cuts and unemployment have always been major issues in the CCP’s stability maintenance, but from the current situation, the salary cuts and unemployment problems faced by most people have not pushed them into a corner, so most people still complain online or choose to accept them. These dissatisfactions with the economy and the government have not been resorted to collective action. Although protests have increased, they are still relatively sporadic cases in a relatively regional manner. There are no large-scale chained incidents, and they are easily mitigated by local governments. Therefore, for the legitimacy of the CCP’s rule and Xi Jinping’s third term, it is more of a hidden danger than a crisis that will erupt immediately.”
The Third Plenum did not have many solutions
Chinese officials do not seem to have a good way to resolve the tense social situation caused by unemployment and wage cuts in the short term.
On the morning of July 19, the CPC Central Committee held a press conference to introduce and interpret the theme of the Third Plenary Session of the 20th CPC Central Committee. Han Wenxiu, deputy director of the CPC Central Finance Office in charge of daily work and director of the Central Rural Work Office, mentioned employment and said that it is necessary to improve the mechanism for promoting high-quality and full employment, support and regulate the development of new employment forms, and improve the social security system for flexible employment personnel, migrant workers, and new employment forms. He did not announce the specific reforms or practices.
On July 18, the communiqué of the Third Plenary Session of the 20th Central Committee of the Communist Party of China was released, which mentioned employment only once, stating that “it is necessary to improve the income distribution system and improve the employment priority policy.”
Peng Peng, executive president of the Guangdong Provincial System Reform Research Association, pointed out in an interview with the Singaporean media that if the Third Plenary Session of the 18th CPC Central Committee does not work hard to deepen the reform, it may be difficult to reverse the economic development situation. After all, this involves the direction of national development and the model of integration with the world market.
“Enterprises still need to be prepared for difficult operations, and residents still need to be prepared for hard times,” he said.
Ms. Chen Yingxuan believes that China’s economic problems stem from factors such as a weak housing market, sluggish consumption, rising government debt, foreign capital withdrawal and trade barriers. If these fundamental factors are not addressed, simply resolving unemployment will be a drop in the bucket.
She told VOA: “The Chinese Communist Party has put a lot of effort into saving the housing market, including lowering housing interest rates and replacing construction with purchase. However, lowering interest rates also means eroding bank profits. Whether it will cause more severe unemployment and wage cuts in the financial system is worth following up.”
She introduced that in addition to continuing to save the real estate market and releasing various revitalization measures, the National Development and Reform Commission of China has also recently stepped up its efforts to show goodwill to foreign-funded enterprises, and has visited Shanghai and Shaanxi for exchanges and discussions, indicating that this may be a breakthrough for the Communist Party of China to solve the employment problem. In addition, although China’s unemployment rate is still high, there is actually a great shortage of blue-collar jobs. Therefore, in the future, the Chinese government should continue and increase its subsidies to small and medium-sized enterprises, and promote blue-collar jobs through public opinion to absorb the excessive labor force in the white-collar job market.
In an interview with Hong Kong media, Yu Hai, a professor at the School of Social Development and Public Policy at Fudan University, called on the Chinese government to be sensitive to social conditions, implement policies to stabilize corporate employment, and stop any policies that may undermine private sector confidence. “Declining employment and income expectations are triggering conflicts between different social classes. The government needs to realize that these incidents are not isolated, but reflect broader social trends.”