What does China look like from ASEAN?
What does China look like from ASEAN?
The Western news is scary enough, consulting firms are being kicked out of China, citizens are being paid to report “suspicious” activies of foreigners to local security offices, interference in elections of Australia and Canada, and the UK, employees of foreign MNCs are being forced into Xi Jinping Thought reading classes, studying for as much as 3-5 hour a week and 4 books a month with book reports due to their CCP office reps. And it looks increasingly like the clamp down on property sales means that governments, especially at the local and provincial levels, may be running out of money; there are reports of government employees not being paid on time and pensions and healthcare benefits being cut. Add to this a lost generation of college grads who are not getting work in alarming numbers. Many are saying we’ve seen Peak China and the Chinese economy is now dying a long slow death.
True or not, both domestic and international confidence is eroding quickly.
Despite this news, I’m not yet in the “stick-a-fork-in-it” camp, but I’m leaning that way. In China there are still niche companies, SOEs, MNCs, and entire industries that are (very) doing well. The Chinese economy is still growing at probably about 4%+. Yes, that’s not the 7-10% of last decade or even the “official” 5%, but it’s still better than most others. And China is still a very large and important (integrated) piece of global supply chains and markets and will continue to be a factor for decades to come, even with a slowdown.
But for China, even 5% probably is not enough to suck up new graduates and keep consumer confidence high enough for locals to invest domestically. There is a dearth of investment opportunities and SMEs are typically not supported well by the government, despite the fact that private companies make up a substantial major of the economic growth and employment.
I’m in Singapore and Bangkok this month before I head to Shanghai in October. I’ve had the opportunity to talk with Chinese academics, SME owners, factory managers, accountants, and students about the Chinese economic situation from their on-the-ground perspective. The good news is some are not completely depressed, but almost no one is optimistic.
First, conservative estimates say there are tens of thousands of Chinese if not more, moving into SEA over the past year plus—personally, I would guess as this continues it will eventually be millions. The rich ones are going to Singapore, the middle class are going to Thailand and a few other large ASEAN cities. Fewer are going to Malaysia. Interestingly, the Chinese I’m talking with are openly scared of Cambodia a Myanmar right now—surprising because of the large and recent Chinese populations there (reports of call center kidnappings have had an impact). No one I spoke with mentioned the Philippines or Indonesia (though there were more professional Filipinos working in Bangkok than I remember in the 4 pre-CV years that I was working there).
And this migration into ASEAN will continue. The Thai govt is offering 5 months visa-free travel to Chinese starting Oct 1. The professional Thais I’ve met are all talking about the number of Chinese workers and factories showing up here. With this new visa scheme expect more new Chinese apartment buyers and new tourists (who find illegal work within the local Chinese community and overstay their visas). We visited new multiple apartment complexes in Bangkok and all of them had Mandarin-speaking sales and management staff.
Over the last two weeks, Chinese from Shanghai, Guangzhou, Shenzhen, and Beijing have all openly said some version of: “He (won’t name Xi directly) has ruined the economy.” Our Chinese friends used to laugh at us for buying a home in BKK and not in China, now they are all looking here. How to get out of China is the thought on many minds right now. China is no longer a viable work option and Thailand represents a chance for many Chinese to start over; recent grads who can’t find work, professionals over 35 who lost their jobs or don’t have much opportunity for promotion women who’ve had a child and now want to get back into the workforce.
Contact in manufacturing, SMEs, and education are saying the economic situation in China is indeed really bad. They are hurting. New college grads can’t find work which will hurt their careers and be a drain on the economy for a decade at least unless they are willing to work factory and other blue-collar jobs (and right now they will not). The over 35’s are socially unemployable as well. This isn’t new, really, but what is new is that they don’t have the confidence to start their own small businesses or the option of joining other small private companies. In the past, entrepreneurialism was a large employer for the sociall disadvantaged (women, 35yo+, lower-level university grads—some education, some professional experience, some savings, lots of national confidence, and many opportunities. Not so much anymore.
Of course, this is all anecdotal, but it pares with what I’m reading and I think that there are enough people saying these same things that it should be taken seriously. 5% growth means China isn’t close to death, but for many, it means the death of the Chinese Dream.
I’ll be in Shanghai next month and try to get more direct info then. If you’re in Shanghai in October, let’s meet up and chat!
