Nobody wins a rat race

How pressures in Chinese tech reflect broader social tensions

I’m Jordan Schneider, Beijing-based host of the ChinaEconTalk Podcast. In this newsletter, I translate and analyze articles from Chinese media about tech, business, and political economy. 

In 2019, I translated and analyzed over thirty articles on Huawei’s longstanding international ambitions, the death of bike-sharing giant Ofo, life in China’s Silicon Valley, China and the NBA, an impending AI winter, the Hu vs. Xi Era, and more.

Last year I’ve also put out 40+ ChinaEconTalk podcast episodes. Highlights include interviews with Peter Hessler on Egypt and China, Jake Sullivan and Mira-Rapp Hopper on US-China relations, Chinese fentanyl labs, US-China tech competition, Asian AI ethics, How Deng inspired Gorbachev, Chinese semiconductor policy, and Maoism’s international impact.

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Increasingly, the viral personal essays I come across are downers. A recent piece by Archibald Pei, an internet analyst, investor and independent filmmaker, paints a negative picture of Chinese work culture and its impact on society at large. Pei reflects on three recent news stories: Huawei founder Ren Zhengfei’s praise of a high school famous for its gaokao cramming, restrictions on gaming for minors, and a new up-or-out policy for managers over 35 at Taobao, Alibaba’s leading e-commerce platform.

He argues that these characteristics of large Chinese internet companies contribute to a form of “involution,” wherein output expands but as a slower rate than labor growth, consequently leaving workers individually less and less productive. He goes on to lament the narrowness and unrelenting pressure at the top of Chinese society.

“At the end of the day, a lot of people still claim: games are harmful to children, it is better not to waste time watching movies, adults don’t have time for entertainment, 996 is the way to success, you can only succeed through bitter struggle. But is modern consumer culture really nothing more than fooling around and destroying your ambition? We spend so much time to gain so much knowledge and research so much advanced technology, but for what?”

This piece is a counterpoint to a recent article in Palladium, which argued that Americans underestimate just how good life in China is.

It can also be read in dialogue to books like the Meritocracy Trap, in which Yale Law professor Dan Markovitz argues that “meritocracy itself is the problem: It produces radical inequality, stifles social mobility, and makes everyone — including the apparent winners — miserable.”

China suffers from the ‘Meritocracy Trap’ more than any Western country.

This past July, on Weibo the hashtag #霸道总裁, which means something like ‘CEO swagger,’ was a trending topic. Most folks were sharing photos of actors like Yang Shuo, famous for playing this sort of role.

In response, the CEO of MoMo, China’s leading dating app with a market cap over $7 billion, sent out an unflattering photo of himself to correct the record of what success in internet firms really looks like.

Because our firm has to meet growth expectations, I’m balding. Because my work hours are too long, my eyes have no life in them. Because of too much anxiety, I’ve got pimples and am putting on weight. Because I’m tired as hell, I have terrible posture. What’s more, my clothes put together cost about $50 total, rocking a Uniqlo t-shirt and some unbranded shorts.

This is what today’s ‘CEO swagger’ looks like. Screenwriters, please take note and don’t mislead the masses any longer.

This post sparked widespread discussion in internet circles about the lifestyle that accompanies. One article on the topic went on to say,

‘CEO swagger’ people also have to raise ‘fuerdai’ (second generation rich). After all, those fuerdai don’t have the experience of starting from nothing, and perhaps will become idle rich and spend their days working out and flirting with girls.

But these first generation rich most likely will do their utmost to educate their kids. They’re probably to go abroad to study, becoming even more pragmatic when it comes to dealing with things.

This sentiment also echoes Tanner Greer’s recent blog post that argues the true fissure in Chinese society lies within a frustrated white-collar class.

In the space of two generations China's professional classes went from nothing to a great deal of something. Publicly they attribute their success to talent and hard work. Privately they admit that they must share this credit with good luck. But will the good luck hold? In a China dramatically dividing, a world cleft ever more clearly between haves and have-nots, will they be able to stay on the side of the haves? The problem is made all the more nerve-racking when they realize that this is not just their problem: it is their kid's problem too. 

It is hard to ride the tiger; harder still to ride it while teaching your child how to hold the reins. This paranoia about the capabilities and prospects of the next generation casts an omnipresent gloom. It grips the hearts of parents from the lowest tier of the Chinese middle class all the way up to the families of billionaires. 

In the most recent episode of ChinaEconTalk, I continue the conversation on middle-class anxieties with Jane Li of Quartz.

A version of the translation below first appeared in TechNode, a trusted source for news about Chinese tech.

If ‘involution’ cannot be overcome, is there any hope for the Chinese economy?

“Leader of the weird bandits gang” Archibald Pei. October 27.

Translation by Jordan Schneider and Pieter Velghe

Recently, three posts repeatedly appeared in my WeChat Moments, which were shared and liked by many friends. They gave me a lot of food for thought.

The first one is a report about how Huawei's Ren Zhengfei has praised the "Hengshui Model" in Hebei. It’s nothing new that Huawei, at the level of organizational culture, praises and studies Hengshui Middle School.

[Hengshui Middle and High School are China’s most famous, demanding, and successful “gaokao factories.” They adopt military-style discipline and schedule students’ time down to the minute. Even at Peking University, Hengshui graduates have a fearsome reputation for hard work.]

The second one is about Taobao/Tmall, which is said to want to rejuvenate its “P8 level leadership” to have all of its team leaders under 35 years old. To be honest, I don't quite believe this is true, because there is no one-size-fits-all approach. However, many people in my friend circle believe and applaud this news, thinking that a "rejuvenation of management" is the secret recipe for long-term success in business.

The third one is about a revision to the Law on the Protection of Minors that calls for limiting time spent playing online games. Not yet clear are the details of the law, nor how it will be implemented. However, most people in my friend circle still support the legislation.

What do the above three stories, old and new, have in common? They made me think of that ominous noun: "involution."

[Pei then proceeds to explain the concept, borrowed from the historical study of agricultural economics, in a convoluted way. I suggest reading this simpler English-language blog post instead. In short: “Output expands, but at a slower rate than labor, so that output per worker falls.” Some argue that in China, post-1300 or so, this dynamic imposed Malthusian constraints on society and stifled innovation.]

Let me expand: The "Hengshui model" is a typical involution. No matter how many people are enrolled in Hengshui Middle School, or how high the number of students who make it to high school, the enrollment quota allocated by “211/985” universities (i.e. China's best colleges) to Hebei Province remains unchanged.

[China has a geographical quota system that assigns slots in top universities by region. Extra slots are allocated for hometown schools, advantaging already privileged residents of Beijing, which has far and away the most top schools in the nation.]

In the whole of China, the enrollment quota for all kinds of colleges and universities for Hebei students basically remains unchanged. Even if Hengshui Middle School gets stronger, it only succeeds in taking slots away from other schools in Hebei, prompting even more top students to flock to Hengshui.

Even those students who stay in their locality, influenced by the Hengshui spirit, lead a gloomy high school life, studying all day and night. In fact, for all Hebei students, the Hengshui model is not only useless but also harmful—it prevents students from accumulating extracurricular knowledge and cultivating hobbies, and perpetuates the stereotype that "Hebei candidates are all exam-taking machines."

"Managing the time minors spend playing online games" is also typical involution. Before the implementation of the law, minors' playing time was already controlled by themselves and the head of the family.

Obviously, the number of students enrolled in any university in the country will not increase due to the introduction of "managing the time minors spent playing online games."

Some people will argue that learning is not only for getting into college, but it also benefits you in life. I have to point out that if a child doesn't want to learn, he or she has countless ways of zoning out. If you forbid games, he will watch dramas. If you restrict dramas, he will read novels; if you ban novels, he will chat with friends; if chatting is forbidden, he will just stare blankly … you will never be able to forbid staring. If you don't solve the fundamental problem [of students needing an outlet] and just come up with a superficial thesis, what you get is "involution."

As for the "rejuvenation of management in Internet companies," and the widely controversial 996 work system [a schedule where people work 9 a.m. to 9 p.m., six days a week], it is a huge driving force of involution. Beyond the tech industry, there’s a serious phenomenon of unlimited overtime and premature aging in old-school industries like finance. In investment institutions, researchers over 40 are a rare sight, and management personnel over 50 are also rare.

Death by overwork is by no means a myth. I know more than one such case from the post-1980’s generation; cases of people contracting a terminal illness by working long hours are even more plentiful. And some people think that hard work is a comparative advantage of China's economy! A well-known investment organization whose name will not be mentioned [likely referencing this FT column by Sequoia’s Michael Moritz] claims that Chinese entrepreneurs are generally more indefatigable than their Silicon Valley counterparts, to the point they have little regard for their own personal well-being, meaning that China's technological innovation will definitely beat the United States. Yeah, OK …

I’ve always thought this “struggle pressure” culture is really abnormal.

Let me expand further: The "struggle pressure” culture seen in China's internet, finance and emerging industry circles is actually the legacy of Americans from the end of the 19th century. But Americans have already thoroughly realized its impossibility—not only is this work culture unachievable on a moral level, but it is unsustainable in practice. In Japan and South Korea, the culture of "struggle pressure" also prevailed for a while in the late 20th century, but because they did not withdraw it in time, it eventually evolved into an irreversible "involution.”

A week ago, an investor asked me, "Will China develop into an important market for console games and AAA games?" [AAA refers to prestige titles whose budgets run over $100 million, such as "World of Warcraft" or "Red Dead Redemption."]

I replied firmly: "No!"

Confused, he asked, "But what if policy encourages it and technology keeps up?"

I said, "It’s still not possible. The average workload of the American workforce is 34 hours a week. In China, I think it’s 45-50 hours. For the middle class, it’s even higher. Every week the 996 people go home, take a shower, and are so tired they go straight to bed. Do you think they have time to play AAA games? Or do you think students who aren’t financially independent can afford AAA games?"

Frankly speaking, if professionals aged 35 or 40 or older are in constant danger of being out of work at any time, then it is impossible to sustain a truly stable demand for high-end consumption. This kind of horrible atmosphere is enough to curb anyone’s consumption. Only the “anxiety-peddling” self-media and knowledge payment platforms [like Ximalaya] will make a buck.

In the US, console and AAA games are a big industry, but so is outdoor sports (including equipment and services). Even landscaping is a big industry. Of course, according to the common view in my friend circle, we don't need to develop those frivolous industries. We just need to develop cloud computing, big data, AI, internet of things, blockchain, which are the high technologies that "determine the fortune of a nation."

However, I still want to ask: Who will ultimately consume this? Isn't consumption the most fundamental demand in all economies? Is insufficient marginal consumption not the culprit behind economic stagnation and even economic crisis? What applications do you plan to make using cloud computing, big data, and AI which will increase consumption?

At the end of the day, a lot of people still claim that games are harmful to children, it’s better not to waste time watching movies, adults don’t have time for entertainment, 996 is the way to success, and you can only succeed through bitter struggle. But is modern consumer culture really nothing more than fooling around and destroying your ambition? We spend so much time to gain so much knowledge and research so much advanced technology, but for what?