The quiet revolution: China’s millennial backlash

Young Chinese rebel against their parents professionally, personally and politically

Yuan Yang in Beijing

Faye Lu, a Beijing-based businesswoman, chose the Chinese new year after her 30th birthday to come clean to her family. At the biggest social gathering in the Chinese calendar, she prepared a New Year’s Eve feast for her parents and 20 relatives — more than 10 dishes including roast fatty pork, pork ribs and fried pickled cabbage. The feast, she knew, would give her the right to make a speech.

“You have taken care of me for 30 years,” she told her guests seated at the table. “I am very grateful to you all. I have had the opportunity to travel and to get to know many different cultures, who have different attitudes to marriage. And I can see that despite their differences to us, they are still happy . . . ”

Lu was circling around a problem: as an unmarried 30-year-old, she is seen by her parents and their contemporaries as a “leftover woman”. At the end of her speech, she presented a veiled request: “I am so grateful to you for not bothering my parents too much to ask when I am getting married.”

When she had confided in friends what she planned to say at the dinner, they did their best to dissuade her. She was hoping for the impossible: to convince her family she could be 30, single and happy. When Lu had discussed her ideas about the future before, her parents said she had been “poisoned by foreigners” while studying abroad. But she was determined to carve out a different life for herself.

Across China, millennials like her are committing small acts of rebellion. Society puts pressure on young people in China to find a good job, buy an apartment and get married — in that order, before the age of 30. But economic restructuring, soaring house prices and increasing numbers of students in higher education are making those goals harder for millennials than they were for their parents. At the same time, millennials have developed different visions of the “good life” to their parents. This generation wants something new from China, and in pursuing it they are changing China, too. A quiet revolution is under way.


Behind a stall in Beijing’s central business district, a barista offers drinks with names such as “Can’t-Afford-To-Buy-A-House Iced Lemon Tea”. Another stall of the same chain sells “My Ex-Girlfriend’s Marrying Someone With Rich Parents Fruit Juice”. This is the brand Sang Tea (sang meaning “dejected, dispirited”) — a business that began in Shanghai last year, initially meant to be a temporary pop-up stall to mock the brand “Lucky Tea”, but whose dark comedy and deadpan presentation resounded with millennials, and prompted franchises to open across the country.
A cup of negative energy a day,” promises a logo on Sang Tea’s website. The phrase is a pun on the slogan of “positive energy” that President Xi Jinping likes to use to exhort young people to support their country’s development.

The success of Sang Tea rests on the growth of sang culture — the millennial self-mocking, semi-ironic embrace of giving up, which has launched viral internet picture-memes, videos and fiction. The 28-year-old writer Zhao Zengliang, who is often associated with sang culture through her dry-humoured internet presence, says of the phenomenon: “Sang culture is where you can take a breather [from the pressures of competition], and where everyone can honestly just admit, ‘I don’t feel I’m good enough.’ ”

Faye Lu, a Beijing-based businesswoman © Gilles Sabrié

Despite being born into a relatively prosperous period, well-educated millennials in big cities not only face unprecedented competition in the labour market but are also finding it harder to buy what Chinese people tend to see as the most fundamental asset: an apartment. For young men, owning a property is seen as a prerequisite for marriage, and it is said to be unlucky to give birth to a child while living in a rented flat. Some 70 per cent of Chinese millennials achieve home-ownership, according to research by HSBC — compared with 35 per cent in the US. But house price rises have far outstripped most people’s salary increases. The average price per sq metre in China’s major cities has almost doubled over the past eight years, according to Wind, a data company.

For the previous generation, who grew up in a planned economy, being part of a large state-owned enterprise or a government department meant the system would take care of you for life, offering rudimentary healthcare, a pension, and even a house. This bargain was called the “iron rice bowl”, and Lu’s parents ate from it, being factory workers.

Today, those who are not fortunate enough to have family homes in China’s big cities, where professional jobs accumulate, will start shelling out the world’s most unaffordable rents upon graduation. A study last year by real estate research company E-house China R&D Institute found that in Beijing the average tenant spends 58 per cent of their income on rent; in Shenzhen the figure is 54 per cent, and in Shanghai 48 per cent. By comparison, the UK’s Office for National Statistics reckons that as of 2016, the average rent-to-income ratio in London was 49 per cent. China’s millennials are starting to experience the economic precarity of their western peers.

With the growth of the private sector and university education, so too has grown the pressure to accumulate internships (often for little pay), overseas experiences and other such CV-boosting exercises. In 2017, almost half of all new labour market entrants were university graduates — a record 8m, up from roughly 4m a decade ago. Amid this competition and a slowing economy, the average monthly income for new graduates fell 16 per cent to Rmb4,014 ($590) in 2017, continuing the decline of the previous year, according to recruitment website Zhaopin.

Despite having a solid career as the head of international development for a major Chinese company, Lu longs to do something more creative: to become a documentary-maker. She is not alone: over 82 per cent of post-1990s kids in China would choose a different job to the one they have if they could, according to a survey of 1.2m people by Wonder Technology, a tech start-up that uses voice-based psychological assessments to help millennials find their ideal date and career.

Baoyi Liang, a 25-year-old theatre set designer © Gilles Sabrié

“Chinese students mostly select a university degree by choosing the most prestigious degree course that will accept their score. That score has little to do with what they value,” says Wendy Wu of Wonder Technology. “They largely chose their career based on their university degrees, which in turn they chose based on their entrance exam scores,” she adds. “I call these the ‘lost millennials’.”

Unsurprisingly, sang culture has attracted hand-wringing from the online edition of the government mouthpiece, The People’s Daily, who called it “spiritual opium”. Ironically, such diatribes are written in the chest-thumping revolutionary language that often sounds dated to millennials. “The thoughts and ideas of young people will determine the future values of the Chinese people,” wrote The People’s Daily, “Smile, get up, be brave, refuse to drink Sang Tea”.

The People’s Daily editorial probably made the Sang Tea phenomenon more, rather than less, popular online. The rise of microblogging website Weibo in the early 2010s raised a generation of netizens attuned to online drama. Millennials dominate the irreverent social-media discourse that has flourished in a nation of 753m mobile internet users. They enjoy internet freedoms that, though curtailed by the government, expose them to ideas their parents would never have entertained during the more strictly propagandist era of television and radio broadcasting.

But millennials wanting freedom in their private or social lives, particularly online, are starting to find that the political often infringes on the personal. Over the past two years President Xi, who likes to be termed “Papa Xi”, has tightly restricted millennials’ access to their natural habitat — the online world — shutting down Weibo accounts, clamping down on live-streaming platforms, and increasing the censorship of articles and videos across China’s flourishing “self-publishing” online space.

“The post-1990s generation are masters of online mobilisation via social media. Despite censorship, they know how to ‘grab eyeballs’ through creating and circulating visually arresting photos and slogans,” says Diana Fu, assistant professor of Asian politics at the University of Toronto. (Although in the west, millennials are generally defined as those born between the early 80s and the late 90s, in China people tend to split generations more narrowly, speaking of the “post-1990s” generation in the same way English speakers say “millennial”.)

However, as Fu cautions, there is a difference between getting hits online — sometimes derided as “slacktivism” — and getting people committed to a cause.

While China’s online tribes include factions in favour of universal rights, equality and democracy, there is also a growing wave of young nationalists and authoritarians, known domestically as “little pinks”. The Party is trying to get internet-savvy, hiring private designers and film studios to create millennial-friendly propaganda.

“There are more nationalists among the younger generation, because of the influence of Communist party education, and because of the increasing social and economic pressures they face,” says political commentator Qiao Mu. A study by think-tank Merics found that nationalists, who love to vent their opinions as part of China’s growing army of online trolls, were more likely to be dissatisfied with their personal economic situation compared with other online tribes.

A tattoo on Terri Yang, a 24-year-old who hopes one day to open a café with a queer-themed name © Gilles Sabrié

Working-class millennials in smaller towns, and rural millennials, have less freedom to beat their own path. The 17-year-old student interns assembling iPhones at Foxconn’s factory in Zhengzhou, for example, accepted whatever jobs their vocational-school teachers gave them. Their socialisation by China’s rigid education system, to accept authority figures dictating their personal lives, may also explain why so many young Chinese also accept the government’s authoritarian over-reach into their private spaces.________________________________

Terri Yang, a 24-year-old from a small town in Hunan, one of China’s poorer central-southern provinces, quit high school to move to Beijing. “I had a dream one night I was in Beijing, and so I went,” she says. At her parents’ request she enrolled in a vocational college to become a masseuse and acupuncturist. After a bout of illness last year she took time off work and reflected on how she had ended up in what she called a “tiresome” job, dealing with complaining patients as a hospital intern for Rmb2,000 ($320) per month, 80 per cent of which she had to spend on rent.

“Chinese parents are conservative: they want you to respect the plans they’ve made for you. My parents think I have no ideals,” she says. But then during her sick leave, she realised that as a young teenager, she had plenty of ideals — just not the ones her parents had hoped for.

Yang is now working towards her ambition to open a café in her hometown, and to give it a queer-themed name. Currently her hometown has no cafés — and no “out” lesbians, she says.

“When I was 13 I watched a TV programme set in the UK about someone opening a café, how he designed and planned it all,” she says. Despite speaking no English, the image stuck with her for more than 10 years. She is now working and training in Beijing at the Korean café chain Caffe Bene to pursue her dream. Before starting, she had not even tasted coffee, which is only popular in China’s big cities.

Her parents accept her café-opening plan because it accommodates their desire for her to have a stable career with another common Chinese parental desire — that she return to her hometown.

Like Terri, Baoyi Liang, a 25-year-old theatre set designer, also found her childhood hopes clashing with those of her parents. She recalls telling them she wanted to be an artist at the age of eight. “You’ll end up on the street drawing people’s portraits,” they warned her. Eventually they agreed to support her through six years of living and studying in London, where she graduated from Central Saint Martins. After graduation, she worked as a waitress in Islington, north London, while doing design projects on the side. “It sounds silly, but it was then that I first realised being a waitress wasn’t humiliating,” she says, sitting in a sushi restaurant in Beijing while uniformed waitresses circle us. “If I had been a waitress in China, it would have been considered an ‘indecent’ job — all that education for nothing. But in that café in Islington, my colleagues were all really happy. They were all working evenings and being actors or scriptwriters in their spare time.”

A Sang Tea pop-up shop in Beijing © Gilles Sabrié

This broadening of ideas of a good career is exemplified by Han Han, the 35-year-old novelist most celebrated by millennials, who wrote on his Weibo microblog earlier this month, “Success isn’t about how many millions you earn. From a billionaire to a gardener, art editor or a programmer . . . everyone has their role and their destiny, each has their own kind of happiness.”

Han was reacting to what he called the “anxiety peddling” of an article headlined “Your Contemporaries Are Leaving You Behind”, about another influential millennial, Hu Weiwei, the 36-year-old founder of bike-sharing tech start-up Mobike. The piece contrasts the careers of Hu with what it calls the “mediocre” lives of her peers who fall short of such success. “You said we’d walk the paths of our youth together,” the author writes, imagining a dialogue between two classmates, “but you went and bought a car.”

Perhaps one of China’s most well-known millennial rebels is the 29-year-old student Li Maizi, part of the so-called “Feminist Five” who were jailed for a month for planning to protest against sexual harassment on subways. What could have been a non-governmental issue became an international scandal as the result of her jailing.

But over the Chinese new year festival two years ago, she made her mark on the subway system in Beijing. Li was part of an “anti-marriage-pressure alliance” who used social media to crowdfund an advert warning against nagging one’s children at the annual familial gathering. It stayed up for a month in Dongzhimen station, one of Beijing’s busiest, and roughly 40,000 people donated.

“Dear mums and dads, the world is so big, there are so many types of people, it’s possible to be happy and single,” the poster read.

Lu’s parents have not fully got the message, and are still trying to set her up on blind dates — the latest with a young employee at Beijing Capital Airport, whom they had thought eligible based on the criteria that “an airport won’t ever go out of business”. But at least one of her uncles understood what she was asking for at the Chinese New Year’s Eve dinner.

“Don’t worry, I know exactly what you mean, and I won’t bother your parents about when you’re getting married,” he said. And then he added: “If the others don’t understand what you mean, they can come talk to me about it.”

Yuan Yang is the FT’s Beijing correspondent

Additional reporting by Xinning Liu

The $5tn ETF market balances precariously on outdated rules

Let us create regulations that put all these investment products under one umbrella

Henry Hu

The US has neither a dedicated system of regulation nor even a workable, comprehensive legal definition of what constitutes an ETF © Getty

In 25 years, the exchange-traded fund has become one of the most popular financial innovations of the modern era. In 2016, seven of the 10 most actively traded US securities were ETFs. But the sector is a regulatory backwater.

Even though these funds pose distinctive risks and the industry continues to grow, the US has neither a dedicated system of regulation nor even a workable, comprehensive legal definition of what constitutes an ETF.

The ETF’s closest cousin is the mutual fund, which is about 70 years older. Both securities offer investors collective exposures to portfolios of stocks, bonds and other assets. Shares in either can usually be bought and sold “at cost”; that is, at or near the value of the portion of the fund’s assets that corresponds to each share, which is also known as the net asset value.

While the prices of mutual funds are set once a day, ETF prices change constantly as the value of their underlying assets fluctuate. The funds also offer a dazzling array of investment possibilities: from plain vanilla equity trackers to exotic mixes of long, short and leveraged exposures. In effect the ETF serves as a universal portal to a wide section of the financial world. No wonder their assets under management have smashed through the $5tn mark.

But this product creates special risks. The integrity of an ETF’s price is only as good as the models and contracts that link everything together, which are collectively known as the “arbitrage mechanism”.

In times of stress, this mechanism has sometimes failed dramatically. On February 5 2018, the shares of an arcane, “inverse volatility” ETF closed at a price roughly 18 times greater than the collective value of its underlying holdings. Large, plain vanilla ETFs have not proved immune to the same issue. Immediately after New York’s 9:30am market opening on August 24 2015, the share price of the US’s second-largest ETF — one that tracks the S&P 500 — lost 20 per cent of its value, even though the index only fell about 5 per cent.

Current US oversight of ETFs stems from an odd mix of stock exchange listing rules and laws designed for very different products. The Securities and Exchange Commission largely makes it work by improvising regulations for each new ETF.

This state of affairs falls short in two ways. First the disclosure rules, which are rooted in a system designed for mutual funds, fail to address the potential for significant problems with the arbitrage mechanism. Under the current SEC scorecard, that S&P 500 fund that plummeted in August 2015 was still able to report a perfect 100 per cent tracking performance covering that period.

Second, the ad hoc reviews undermine the fairness and consistency of regulation. Functionally identical funds are often subject to disparate rules, and gaining approval for new funds can be opaque and unpredictable. When new requirements emerge, they apply only to new funds, allowing older funds to continue operating under looser rules.

We need a regulatory framework dedicated to ETFs. John Morley, a professor at Yale Law School, and I have proposed that the SEC put all investment products that use the arbitrage mechanism under the same regulatory umbrella. Writing down the rules would avoid the need for ad hoc, individualised reviews for all but the most esoteric or risky products.

We need tighter disclosure requirements that would capture breakdowns such as occurred that August day in 2015 and suggest all ETFs be forced to provide broader, more forward-looking information about their engineering.

The time to act is now: this unique market rests on a fragile, outdated and complex structure.

We need something far stronger.

The writer teaches at the University of Texas. John Morley, who teaches at Yale, also contributed to this article.

Ten Weimar Lessons

Harold James

Reich President Paul von Hindenburg and Nazi leader Adolf Hitler (1933)

PRINCETON – Since the establishment of the Federal Republic of Germany in 1949, Germans have looked back anxiously to the collapse of the Weimar Republic in the early 1930s and the rise of Nazism. But with many of the world’s democracies under growing strain and authoritarianism on the rise, the lessons of that period should be heeded elsewhere as well.

Start with the fact that economic shocks – for example, inflationary spirals, depressions, and banking crises – are challenges to all governments, everywhere and always. Economic insecurity and hardship persuade people that any regime must be better than the current one.

This is an obvious lesson not just from the Weimar years, but also from a large body of research on the economic logic of democracy.

A second key lesson is that under extreme economic conditions, proportional representation (PR) can make matters worse. When a country’s politics are fragmented, PR is more likely to deliver an incoherent electoral majority, usually comprising parties on the far left and the far right that want to reject “the system,” but agree on little else.

Taken together, these two lessons constitute the conventional wisdom among political scientists about the Weimar experience. Too often, though, each lesson is considered in isolation, leading to a dangerous sense of complacency. The first argument lulls people into thinking that only an extreme economic crisis can threaten the political system; the second leads people to assume – incorrectly – that non-PR systems are inherently more robust.

To preempt complacency, it helps to consider eight further lessons from the Weimar era. First, referenda are dangerous, especially when they are rarely used and the electorate has little experience with them. In the Weimar Republic, the National Socialists had virtually disappeared by 1929. But that year, the party was able to reestablish itself by campaigning in a fiercely fought referendum over post-World War I reparations.

Second, dissolving parliaments prematurely when the law does not require it is risky, to say the least. Even a vote that creates the basis for new elections can be interpreted as an admission that democracy has failed. In July 1932, the Nazis won the largest share of the vote (37%) in a free but legally unnecessary election. The previous election had been held less than two years earlier, and another one was not due until 1934.

Third, constitutions don’t necessarily protect the system. The Weimar constitution, designed by some of the day’s most insightful and ethical experts (including Max Weber), was near-perfect.

But when unanticipated events – whether foreign-policy dramas or domestic unrest – are interpreted as emergencies requiring an extra-legal framework, constitutional protections can erode rapidly. And the enemies of democracy can foment such events. Similarly, a fourth lesson is that business lobbyists can play a baleful behind-the-scenes role in undermining agreement between parliamentary factions.

Fifth, a political culture in which leaders demonize their opponents erodes democracy. In the Weimar Republic, that pattern began before the Nazis became a significant force. In 1922, Foreign Minister Walther Rathenau was assassinated, after having been subjected to an intense, often anti-Semitic campaign of hatred from the nationalist right. Soon thereafter, Chancellor Joseph Wirth, a center-left Catholic, turned to the right-wing parties in parliament and said, “Democracy – yes, but not the kind of democracy that bangs on the table and says: We are now in power!” He concluded his admonition by declaring that, “The enemy is on the right” – a statement that ended up only fanning the flames of tribalism even more.

Sixth, the president’s family can be dangerous. In Weimar, the aged field marshal Paul von Hindenburg was elected president in 1925, and reelected in 1932. But by the early 1930s, after several small strokes, he was suffering from dementia, and his weak and incapable son, Oskar, controlled all access to him. The result was that he ended up signing whatever agreements were presented to him.

Seventh, an insurgent group does not need to have an overall majority to control politics, even in a PR system. The largest share of the vote that the Nazis ever captured was 37%, in July 1932; in another election held that November, their support had fallen to 33%. Unfortunately, that decline led other parties to underestimate the Nazis, and to regard them as a possible coalition partner.

Eighth, incumbents can survive by buying off a discontented populace for some time, but not forever. In the Weimar era, the German state provided generous municipal housing, local government services, agricultural and industrial subsidies, and a large civil service; but it financed those outlays with debt.

To be sure, the Weimar Republic initially appeared to have a miracle economy. It was only later that German politics soured, as the government sought foreign support. Other countries found it hard to believe the government’s warnings that, without speedy assistance, a political catastrophe would ensue. And it would have been harder still to convince their own electorates to bail out Germany.

It is often assumed that countries with majoritarian electoral systems like those in the United States or the United Kingdom are more resilient than countries with PR systems. After all, America and Britain’s democracies are older, with more deeply entrenched cultures of political civility.

In reality, though, these systems can still become vulnerable over time. For example, the extent to which a country’s economy depends on foreign savings (“other people’s money”) may be politically irrelevant for long periods. But with current-account deficits of 3.7% of GDP in the US and 3% in the UK projected for this year, a reckoning could be in order, especially if isolationist nationalism among American and British voters produces disenchantment among their foreign creditors.

Harold James is Professor of History and International Affairs at Princeton University and a senior fellow at the Center for International Governance Innovation. A specialist on German economic history and on globalization, he is a co-author of the new book The Euro and The Battle of Ideas, and the author of The Creation and Destruction of Value: The Globalization Cycle, Krupp: A History of the Legendary German Firm, and Making the European Monetary Union.

Handicapping the Next China Bubble

Are the country’s bonds the new asset du jour?

By Nathaniel Taplin

Pedestrians in Shanghai in February. Chinese bonds saw their best performance in years during the first quarter of 2018. Photo: Qilai Shen/Bloomberg News

Following the Chinese central bank’s unexpected cut to banks’ reserve ratios last week, investors are again worrying about the fault lines in China’s economy. But for one asset class, that discordant note was music to the ears: Chinese bonds, which are on a tear.

After a brutal 18 months of Beijing-led “deleveraging,” high-rated bonds notched their best performance since late 2015 in the first quarter of this year. Yields on one year AAA-rated corporate debt are down nearly a full percentage point since December, having taken another leg down since the central bank’s move to cut the ratios.  
The rotation into bonds, driven by weakening inflation and signs of easier liquidity, has already sucked cash out of “old economy,” inflation-dependent Chinese equities: China’s benchmark CSI300 is down over 10% since late January.

But a sustained bull market in high-rated bonds isn’t yet a sure thing. And spreads on low-rated debt are starting to edge higher, signaling the return of worries about credit risk.

Yield spreads on Chinese 6-monthcommercial paper, percentage points
Source: CEIC

Consider what happened last time the People’s Bank of China launched an easing cycle, in late 2014. Long yields did eventually fall—but only after a monstrous liquidity-fueled stock market bubble popped in 2015, helping trigger a yuan panic and stomach-churning capital outflows.

China’s central bank might have better luck pushing down yields this time without inflating bubbles elsewhere or driving capital out of the country.

Following the disaster of 2015, regulators have tightened rules both on stock margin lending and capital controls. That means more liquidity from future easing could stay parked in bonds. And unlike 2015, China isn’t force-feeding investors gargantuan helpings of municipal bond debt, putting upward pressure on yields.

Nevertheless, Chinese investors are past masters of finding new assets for speculation when central banks suddenly start handing out cash. One new bubble candidate? Shares relates to Chinese chips.

Shenzhen listed Unigroup Guoxin and Nationz Technologies Inc. both jumped over 20% last week following the U.S. decision to ban semiconductor sales to Chinese tech champion ZTE. Chinese investors are speculating that the move will ignite a chip-funding boom at home.

China’s capital controls will also face a renewed test this year if the Federal Reserve keeps hiking rates.

Investors tempted to add some Chinese government bonds or high-rated corporate debt to their portfolio might be wise, therefore, to wait and see if the regulatory blitz of the past 18 months has really created a watertight ship— or if, as before, the water will start finding its way into unwanted places.