Even these Chinese citizens feel desperate. Experts warn: A bigger crisis is brewing

Even these Chinese citizens feel desperate. Experts warn. A bigger crisis is brewing. Comprehensive salary cuts in Chinese financial institutions have attracted international attention, with foreign media warning that this could be brewing a larger crisis. On September 20, Shen, a social media personality revealed, A friend of mine works at a state-owned financial enterprise and was informed that from September to December this year, their monthly salary will be reduced to Beijing's minimum standard of 2,420 yuan. Another social media figure disclosed that friends in the banking industry have had their salaries reduced to only one-fifth of their original annual income. Employees of Industrial Bank reported that not only did they not receive any holiday bonuses during the mid-autumn festival, but they were also notified of salary cuts, effectively working without pay. These cases illustrate how China's real estate crisis is spreading, now affecting middle-class and high-income groups. Some may lose the ability to pay their mortgages or even support their families. On September 20, Bloomberg also reported on this phenomenon, citing the example of Mr. Wu, a 43-year-old insurance executive in Shanghai. Walking the streets at 1 a.m., he collapsed under the stress of his salary being cut by one-fifth. He also feared layoffs, and with two children studying abroad, he can no longer afford their tuition. Wu expressed frustration over not getting a raise despite working hard and questioned the value of his job, stating, What's the point of telling children to study hard? Top graduates can't find jobs, and even returnee graduates are unemployed. Bloomberg noted that Mr. Wu is one of millions of well-paid professionals in China whose lives have been disrupted by Xi Jinping's economic policies. Ms. Sharon Cao, an executive at a mutual fund company, shared that the entire industry is pessimistic, with no hope in sight. Your abilities no longer determine your fate, she said, adding that Stilnox, a sleeping pill, has become her best friend. Ms. Cao has sold her Porsche and rarely eats out now, anticipating further pay cuts this year. Experts warn that the growing sense of hopelessness and demotivation among professionals could lead to a wider social crisis. For instance, Christopher Marquis, professor of Chinese management at the University of Cambridge, stated, This indicates a dangerous undercurrent within the Chinese workforce. These people have been the main drivers of the Chinese economy, but their disillusionment could lead to a broader social crisis. Is Shanghai paralyzed? The number of real estate listings has skyrocketed, but buyers are nowhere to be found. More and more Shanghai landlords are finding it increasingly difficult to sell their properties. On one hand, fewer people are viewing houses. In the current environment, needs such as buying a house for marriage or for children's schooling have been addressed through alternative means. For example, if someone needs to buy a house for marriage, they may decide not to marry, or if for schooling, they may return to their hometown. Every problem has a solution. It just depends on whether it's a good or bad one. On the other hand, house prices are a major issue. Many landlords should realize that unless they list their property at the lowest price in the community, no one will come to see it. If it is listed at the lowest price, someone may view it, but they will likely offer the lowest of the low. For example, if the house is listed for 8 million yuan, buyers might offer 5.6 million yuan as soon as they walk in the door, enough to make any landlord feel frustrated. Looking back a few years, Shanghai landlords were at the top of the food chain, especially those who owned multiple properties. But in just a few short years, the situation has reversed, turning strong landlords into strong buyers. A well-known secondhand housing platform shows that the number of secondhand homes listed in Shanghai has exceeded 170,000. To put this in context, Shenzhen has about 50,000 secondhand listings, Beijing has around 140,000, and Guangzhou around 150,000. Shanghai's listings lead the pack at 170,000. In comparison, in 2021, the peak year for Shanghai's property market, there were about 100,000 secondhand homes listed. In just a few years, that number has surged by 70%. There are more houses listed, yet fewer buyers. Supply is increasing, but demand is shrinking rapidly. Under such conditions, the only way to sell a property is to continuously lower the price. Although new policies are frequently introduced at both national and government levels to save the real estate market, the impact has been limited, and the market continues to decline. Many international investment banks have issued reports predicting that China's property prices may continue to fall for a few more years and could stop declining by 2027. But if prices drop for another two to three years, can the real estate market withstand it? Can developers survive? What about the upstream and downstream parts of the industrial chain? There are many problems, but few solutions. In Shanghai alone, current secondhand property prices have dropped significantly compared to a few years ago. For families who bought at high prices in 2021, their down payments are effectively lost, and many now own properties with negative equity. The price of old and dilapidated homes in the city center has fallen dramatically. In Wifang Village near Lujiazui, homes are listed at around 1.7 million yuan. In Shengtiandi on Chengxu Road in Putuo District, property prices have dropped from 2.7 million yuan to around 1.7 million yuan, a loss of 1 million yuan. Many people think it's difficult to earn 1 million yuan, but in real estate, losing that much can happen in a few swift strokes. Meanwhile, both the secondhand and new housing markets in Shanghai remain sluggish. In Jing'an Mansion in the Jing'an District, one property lost 5 million yuan in value in just two years. In Minhang District, Zizhou Peninsula, which once had unit prices as high as 100,000 yuan, now sees prices below 60,000 yuan, an enormous decline. More significantly, except for a few active projects, many real estate developments are as quiet as stagnant water. No viewings, no transactions. Once, people scrambled to buy property in Shanghai. But now, even when a house is placed right in front of them, no one blinks. Some are now wondering how to buy at the bottom in Shanghai. The central bank must resist deflation, and major domestic companies need to reduce costs and improve efficiency to survive. When chatting with friends, I often ask, are there any worthwhile investment opportunities right now? Most of them just laugh it off, saying, if there were, I would have bought them long ago. On one hand, salary cuts and layoffs persist. On the other, demand remains weak. As businesses continue to struggle, layoffs will only increase. This situation didn't arise overnight, and it won't be solved overnight. If deflation continues, the domestic consumer market will remain sluggish. Recent reports, like Beijing's restaurant industry showing a profit margin of just 0.88%, have shocked the public. Isn't this a waste of time? I believe there will still be people who buy, but when they do, they will carefully consider whether they truly need the property. They'll evaluate their real needs rather than rushing in blindly. Under deflationary pressure, with people lacking money to spend, will they really borrow millions to buy houses? Those encouraging others to take over properties now are either misguided or have bad intentions. I admit, Shanghai is an international metropolis, and in the long run, its properties will hold value. But now is not the time to buy. If you rush in now, those who bought early at lower prices and those holding overpriced properties will end up being the ones who suffer the most. Therefore, the best strategy is to hold on to cash and wait. When economic expectations recover, consumer confidence rebounds, residents' incomes increase, and employment stabilizes, only then will the real estate market show hope, and it won't be too late to act. China saw the world's largest exodus of high-net-worth individuals last year and is expected to witness a record exodus of 1,500 people by 2024, dealing a further blow to its already severely weakened economy. The economic situation in the mainland is currently extremely gloomy and desolate. A place once considered the world's factory, with a bustling past of growth and development, is now enveloped in a sense of sadness and desolation. Once luxurious and highly developed cities such as Beijing, Shanghai, Shenzhen, and Guangzhou are now shrouded in a very bleak atmosphere. Companies and stores are closing and going bankrupt en masse, and unemployed workers are homeless, sleeping on the streets every night. Consumption is stagnant, workers are losing their jobs and income, and wages are being withheld, leading to widespread protests and strikes. People are reluctant to spend money and are saving as much as possible. A sad and depressing atmosphere is engulfing the once splendid cities. China's economic instability and the fear of a politically tense environment are top concerns for many wealthy Chinese, according to a report by investment migration firm Henley & Partners. Many have chosen to leave the country for safer havens, fearing they will lose their fortunes if political upheavals occur, as they have in the past. The United States, according to the researchers, is the top destination for these wealthy Chinese. Last year, China saw 13,800 high-net-worth individuals leave, mostly to the United States, Canada, and Singapore, the firm found. Such individuals, known as HNWIs, are defined as those with at least $1 million in assets. Henley & Partners said it was difficult to know exactly how much wealth was being taken with them when people moved, but, in our experience, the high-net-worth individuals, HNWIs, who move the most, are those with assets between $30 million and $1 billion. The large number of wealthy Chinese moving abroad could add further pressure to the country's fragile economy. A protracted property crisis has engulfed major developers, severely denting the country's wealth and putting pressure on debt-laden local governments. Earlier this year, the International Monetary Fund said China faced a high degree of uncertainty due to the property turmoil. Fitch Ratings downgraded China's sovereign credit outlook to negative in April, following a similar move by Moody's Investors Service in December. Not only the real estate sector, but also other businesses and industries in mainland China are facing an increasing wave of bankruptcies and collapses. This has led to a significant rise in unemployment, with many workers losing their jobs and incomes, leading to decreased consumption. Supermarket chains, service stores, and restaurants are closing down one after another. Everything is gradually reaching a deadlock in mainland China. Faced with a recession and sluggish consumption in China, along with escalating geopolitical tensions, large corporations and production supply chains are gradually exiting the market. Major Western enterprises, as well as companies from Japan, Korea, and Taiwan, are leaving in droves, shifting their supply chains and production to countries such as India, Vietnam, and Indonesia. This is further exhausting and depressing the mainland economy. Once the world's largest factory, Chinese workers now have to seek employment in neighboring Southeast Asian countries to survive. Shanghai, once a bustling metropolis, is now showing signs of decay everywhere. In the city center, it is common to see empty streets and deserted malls. Even popular areas like the Bund and Nanjing Road are eerily quiet. Food markets that used to be crowded with shoppers are now practically empty, and the once busy commercial streets are now desolate. Businesses are struggling to survive. Many store owners in Shanghai are facing difficulties, with some even closing down their shops. Even large malls are experiencing a significant drop in foot traffic, and iconic locations like the McDonald's on Sichuan North Road, which was one of the oldest in Shanghai, has officially closed after 28 years of operation. The economic decline is visible everywhere. The business environment in China is rapidly deteriorating, leading to an exodus of companies and a significant drop in foreign tourists. Large companies are laying off staff and downsizing projects, while smaller companies are on the verge of bankruptcy. Even part-time jobs like ride-sharing and food delivery are oversaturated. Landlords in Shanghai are finding it increasingly difficult to rent out their properties, as many people are leaving the city due to the tough economic conditions. Factories are relocating, and the population in the city is decreasing. The once-prosperous city of Shanghai is now struggling to maintain its former glory. Shanghai has turned into a desolate ghost city, with fewer people on the streets, shops shutting down, and businesses closing. China's business environment is deteriorating, with domestic companies incurring losses and foreign companies leaving. The economic data from China is not optimistic, and experts believe it has already become a zombie economy. A series of entrepreneurs and billionaires have left China, taking large amounts of assets with them, dealing a heavy blow to the economy. The once-bustling streets of Shanghai are now quiet, with few people around. Even major shopping malls and popular commercial streets are desolate. Some residents have observed that the traffic congestion in Shanghai has lessened, but the lack of people on the streets and in malls is striking. The current state of Shanghai reflects the broader economic challenges facing China, with declining consumer confidence and reduced disposable income leading to weaker consumption. The government's measures seem focused on maintaining stability rather than reviving the economy, as the potential for social protests and resistance looms.