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China’s Age of Malaise

Sybil’s distaste for marriage is inseparable from China’s fierce competition for college and employment. She is in a master’s program in linguistics, and has a flexible attitude. “If you give me a job, you can send me to Mars,” she said. But the best position she could find for now was an internship at a P.R. firm—and she figures that, if she leaves to have a kid, she’ll never catch up. “We’re running like hamsters on a wheel,” she said.

Historically, young people have been a volatile presence in Chinese politics. In 1989, students protesting corruption and autocracy led the occupation of Tiananmen Square. In the present moment, their distress takes other forms. For years, young graduates have streamed into China’s big cities in pursuit of wealth and stimulation, but, in August, state media reported that almost half of new graduates were returning to their home towns within six months, unable to afford the cost of living. Among those who stay, some are answering advertisements for “bedmates”—sharing a bed with a stranger—or living rent-free in nursing homes, in return for spending ten hours a month entertaining the residents.

A decade after Xi told young people to “dare to dream,” he now admonishes them to curtail their expectations; in recent speeches, he has said that disgruntled youth should “abandon arrogance and pampering” and “eat bitterness”—basically, Mandarin for “suck it up.” The exhortations land poorly. Young people mock the implication that they are little more than a renkuang—a “human mine”—for the nation’s exploitation. As a subtle protest during college-commencement season, graduates took to posting pictures of themselves sprawled face down, or draped over railings, in a manner they named “zombie style.”

Spend some time on the edges of China’s business world these days and you’ll pick up new rules of thumb. If you have to speak publicly, stick to the Party patois; when the first large cruise ship built in China was launched, last year, the company’s C.E.O. pledged devotion to “a new concept of cruise culture and tourism with Chinese cultural identity as the core.” If you are abroad, be wary of urgent requests to come home. “Several people I know have been called back to China for a deal. It was a setup by the government, just to nab them,” a financier told me. In custody, there are clues to help gauge the gravity of the interrogation. “If they give you your phone at night, everything is going to be O.K.—they just want to talk to you,” he said. “You can WeChat your wife or your mistress.” But, if investigators keep your phone from you, the odds are you are a target, not a source.

It is difficult to overstate how much Xi has shaken China’s private sector. Decades ago, as Deng began opening up the country, he said, “Let some people get rich first and gradually all the people should get rich together.” For years, each successive wave of aspirants watched the entrepreneurs before them and then “dove into the sea” themselves. In 2014, Alibaba went public on the New York Stock Exchange and raised twenty-five billion dollars, the largest I.P.O. in history at the time. New enterprises proliferated; by 2018, China had attracted sixty-three billion dollars in venture-capital deals, up nearly fifteenfold in five years.

When Xi first became President, he revealed little of his view of the private sector. “Nobody was sure what we were getting,” Desmond Shum, a real-estate developer based in Beijing at the time, recalled. But businessmen figured that the private sector was too important to mess with. A Chinese saying held that entrepreneurs produced sixty per cent of the nation’s G.D.P., seventy per cent of the innovation, eighty per cent of the urban employment, and ninety per cent of new jobs.

By 2015, Shum said, “you started seeing things going a different route.” That December, Guo Guangchang, the industrialist known as China’s Warren Buffett, was held for several days; later, his company sold a series of major assets. In 2017, Xiao Jianhua, a billionaire with ties to politicians, was taken from his apartment at the Four Seasons in Hong Kong, in a wheelchair, with a sheet over his head. (His disappearance went unexplained until last August, when authorities announced that he had been imprisoned for embezzlement and bribery.)

But it was only in 2020 that the risks became truly evident. Jack Ma—the founder of Alibaba, China’s richest man, and a role model to younger entrepreneurs—criticized the Party’s handling of financial reform, and then disappeared for months. Regulators postponed the I.P.O. for Ant Group, another of Ma’s companies, and fined Alibaba a record $2.8 billion for antitrust violations. Similar disappearances and penalties swept through one industry after another: education, real estate, health care. The Party explained that it was targeting inequality, monopoly, and excessive financial risks, but some of the arrests seemed personal. Ren Zhiqiang, a real-estate tycoon, received an unusually harsh sentence of eighteen years on corruption charges, after someone leaked an essay in which he mocked Xi as a “clown stripped naked who still insisted on being emperor.”

None of the targets showed any organized political intentions. The only visible pattern is that Xi and his loyalists appeared intent on snuffing out rival sources of authority. One after another, he got rid of anyone with power, the entrepreneur said: “If you have influence, you have power. If you have capital, you have power.” Xi is said to have spoken bitterly of watching Boris Yeltsin contend with Russian tycoons in the nineteen-nineties. Joerg Wuttke told me, “When Putin entered the Kremlin in 2000, he assembled the oligarchs and said, basically, You can keep your money, but if you go into politics you’re done.” He went on, “In China, the big names should have learned from that meeting, because in this sense Putin and Xi Jinping are soul mates.”

For years, economists have urged the government to stop relying on real-estate investment and bloated state-run companies, and to increase health and retirement benefits so that ordinary households consume more, spurring the private sector. But Xi, a Marxist-Leninist at his core, said last fall that state-owned enterprises would “get stronger, do better, and grow bigger.” Foreign investors are alarmed. In the second quarter of 2023, according to JPMorgan, direct investment from overseas fell to its lowest level in twenty-six years. Local governments, short of cash, have adopted a subtle extortion method that lawyers call “taxation by investigation.” A factory owner in Shanghai told me that Party officials used bank records to identify residents with liquid assets of at least thirty million yuan—about four million dollars—and then offered them a choice: hand over twenty per cent or “risk a full tax audit.”