Our second podcast is a discussion between Mu Chen and Robert Wu. We talked about three of the most asked topics amongst our followers. As a supplement to the facts and analysis in our posts on these topics, our chats focused on providing contexts and our personal experience from the ground on these topics. We also shared our thoughts on picking this week’s posts. Below are the highlights:
Part 1: China’s Bureau of Statistics to stop publishing youth unemployment data
Why are they doing this?
[00:01:28] Robert: Well, at the fundamental level, I would argue that transparency is really not at the core of Chinese value system. Transparency is good, everyone knows that. Transparency is good for governance. But I think within the Chinese value system, there are higher tiers of priorities. And in this particular case, I would argue it's pragmatism. The economy is not really doing well right now and the government is very anxious to reignite the growth. And right now, what government understand is people's confidence is the most important driving force. A Lot of business people are not confident. A lot of investors are not confident. So they try to create more confidence by resetting expectations. And I think it's all part of that. Even though certain things are sacrificed, things like transparency, right? Things like showing enough data to help you understand what's going on in the economy. I wouldn't say I agree with this approach, but I think underlying this act is still the anxiety of the government that they want the economy to do better. They are they are working on it. They are taking actions. And although some of the actions we don't necessarily agree with.
What was off with the way this issue is handled?
[00:03:29] Robert: I think setting expectations is right. But how you do it is is actually very important. And I have to say, by just shutting this down, it's not really very responsible and it's not really professional.In the best form of the world, we would want these government officials to give a clear explanation for the statistics they had. People in the industry always want the government to explain a little bit more about how they arrive at their statistics. It's not just [a problem about] employment. It's about the GDP, the CPI. There's minimal details. There are no information about the sample size, the biases. When they rebalance the statistics, there's no explanation at all. Nobody knows what they mean when they publish their data anyway.
[00:04:25] Robert: No one can confirm whether the readings of the data is right or wrong. So I think I would say they could do better by being more transparent, by being more professional. It's if a data is not supported by the underlying assumptions and details and what we call the data metrics, the data dictionaries, right? That's not good data anyway. It's just some numbers on the wall. And I don't think that's something they have realized.
[00:04:55] Robert: that come back to the question, how the decision was made. I think it's just because there just a lack of real talents at those levels, a team of professionals and talents that have to be very good at what they're doing, doing statistics while at the same time, very good at facing the public, explaining the their data to the public in the same way, say, we at BigOne lab explain our products to our clients. At the same time, those people also have to survive in the gigantic bureaucracy. Right? So basically what we are asking for is someone who is both good at dealing with the subject matter, who is good at dealing with the general public and who is good at dealing with their colleagues, their peers and their bosses. This is hard to ask [for] and it's just I think a lot of problems in China come back to really, you know, the quality of the personnel. And it may not be more complicated than that.
[00:06:06] Mu: it might be a systematic characteristic, because of China’s education system, in the first place. We had to chose a major in our first year [of university if you’re in China]. While when you are in HK and when I was in the US, actually we can study inter-discipline classes first. So we kind of get trained in a liberal basis, and got some hints or taste of some skills sets from different subjects.
[00:06:36] Robert: but that’s what most people have access to.
[00:06:43] Mu: So they may be they are like people that are in the Bureau of Statistics. They are really good at statistics, as well as maneuvering through the, you know like you said the promotion system or the political system. To get promoted all the way to the top. But PR is not, at least for now, the biggest training that they need the requirement for them to get to the top. [00:08:09]
How can this be done better?
[00:07:10] Robert: Certainly I would just recommend them to treat the public as one of their clients. If you explain the biases, the sample size and all these details well, data can be good and can be really helpful. So when there are like, say data aberrations, data inflection points, people understand whether it's for real or, whether it's just because of some data irregularities. For example, youth unemployment. Is that really bad right now? I mean, just looking at the data, it is telling a bad story. But the fact is, if we have access to exactly how many people they have surveyed in their statistics, what kind of people are responding. Are they not looking for jobs or are they looking for jobs or don't get any offers? You know, all these details, if are there could be way more beneficial than just telling a number.
Part 2: Contextualizing current sentiment on China’s economy
How do we contextualize the youth unemployment situation?
[00:09:19] Robert: I think one thing that people have to understand is that when we talk about youth unemployment in China, it has specific Chinese characteristics in that if we're talking about youth today, like if you talk about people from 16 or 18 to 23, 24, right? Those people were born at the turn of century. Most of their parents, they were working in the beginning of the reform and opening up. And their parents are the first generation that have accumulated some wealth. They have apartments. They have some assets. So it's not like as if like in some countries, when you talk about youth unemployment, you're talking about young people on the streets doing drugs. Right? That's the imagery, the Western societies have. in China, it's different. It's not as if they don't have jobs. They actually do have some job opportunities. It's just there is a discrepancy. There's a gap between I think for many people there's a gap between the jobs that are offer and the jobs they are willing to take. There is a lot of manual jobs, for example, factory jobs that are paid well. But a lot of college graduates won't go down that path. And what's what's the alternative? Well, they can still stay at home. The parents will still provide. They will think, well, maybe it's not easy to find a job now, I can find a job later or something. So it's a totally different type of unemployment we're talking about here. This is the type of unemployment that may be not so much of a shock to the society at the moment. And the impact could be quite different from, say, youth unemployment in, say, North Africa or in the Middle East. And I think that's something that we have to understand.
[00:11:30] Mu: the negative social impact of youth unemployment in China actually is sort of contained by this social structure. I think there's another interesting thing about structural. So what you say is a structural unemployment issue, right? Going to college in university do not want to take the blue collar jobs. I actually seeing I'm seeing more and more youths taking part time gigs on Xiaohongshu and Douyin (Chinese version of TikTok) doing live streaming. They are performing, selling products, writing their stories and posts online about eating, shopping, traveling. And they're making some money. Yeah. So with that as well as parent support, there is stress for them them. But I guess they're still working.
[00:12:25] Robert: youth unemployment on the surface it's an economic question, right? How many people are employed or not? But the reason we pay so much attention to it is because it's a social and possibly political matter. Young people without jobs, what can they do? So when we look at this, we have to be able to understand the social and political aspects to it. And with that, you have to take, you know, family values, social norms into account. So it's not a purely economic matter. But again, if the statistics, the bureaus, they can be more transparent with their methodologies, showing more details of their data, the underlying reasonings, the underlying data from, you know, to explain, wow, explain better the rationale between changes in data. It would be so much better than us here sitting here guessing about, you know, what's the real situation out there.
Negative Narrative about China’s overall Economy struggle is back again, how should we understand it?
[00:15:20] Robert: I think, definitely for the for the friends around me especially, you know, we live in the first tier cities. We talk with a lot of business people. We talk with investors. There is a general feeling of pessimism. A lack of confidence is really palpable, compared with, many, many years before. This is what I would say the most, most pessimistic time that I have ever witnessed, just by looking at the people around me and looking at the news headlines from the West. But that's one part of it. There's also more layers to it, when you open up, Financial Times, Wall Street Journal, you have this feeling that China is really collapsing, right? All the hell is breaking loose. Society is on the brink of disasters. That's the imagery that they try to convey. But I think I do have a problem with that part
[00:16:15] Robert: But here we walk on the streets. We live our life. And actually, there are things that you cannot really explain if the society (economy) is really breaking down. For example, just look at the (high) hotel prices, flights, the length that we're going through buy the train tickets. You know, everyone is on the move. If you go to a train station, it's a mixture of holiday going as well as, going to work. It's really hard to reconcile that with an economy that is like just going down. I would say people are less happier than before. I would say some people, substantial amount of people are poorer. I would say expectations are less confident than before. But but you do still feel the the drive, the urge to work. People are still hardworking. And that's something we want to stress, over and over again. People are not like just lying down and wait for your government to hand out some subsidies or wait for some miracles to happen. People are going around places.
Why is there disappointing sentiments on China’s recent economic performance?
[00:17:22] Mu: I think the sentiment comes from, you know, there are two major sentiments. One is the disappointment about [the missing V-shaped recovery]. Many, many people walking out of Covid lockdown is expecting a rapid V-shaped recovery. So that's not happened. I didn't expect that given we look at what happened in the other countries when they open up, there was no such thing called V-shaped recovery. So why would that happen in China? I think second sentiment, I actually just realized is that this is a first downturn experienced by people growing up in our generation. Then we finally open up generation. Sure, because I was under the impression that there was, you know, experience in the Asian financial crisis. I was too young then. Then there's the 08-09 Collapse Financial, the Great Recession. But I had that experience when I went to the US in college. Right? I saw that, you know, high unemployment rate, hard to find jobs and things like that. But actually when I asked my friends around my age in China who grew up in China during those years, that was the peak years. Remember, this is like 08 Olympics.
[00:20:14] Robert: even if people some of the people are getting, you know, less rich, they haven't been rich for a long time anyway. For many of them and for many of their parents, they came from the countryside. They rose rapidly in the last 20 or 30 years. The experience of poverty, the experience of underdevelopment is still very fresh. The work ethics, the spirit doing hard work, making a better life is still much pretty much over there. So I think it's also not bad to have some downturn to witness and experience some downturn in your life because that's part of life, right? It's all cycles up and downs. And and I think for really a lot of people that we know, including ourselves, it's also a moment for growth. It's a moment for us to understand. Also cash flow is quite important, Doing making profit is important not just like, top line growth, and there will be an end. I mean, capital raising is not endless. You know, all these actually pretty important lessons.
[00:21:28] Mu: It’s like maturing up, from a teenager.
Robert: It is, it is like growing from a teenager to an adult life.
Part 3: Understanding China’s healthcare system via the corruption campaign
Is this is another industry crackdown, like what happened to education and internet industry?
[00:23:20] Robert: Well I think to talk about health care, we have to first of all, we have to put the things in the right context. So China's health care is far from being perfect, but it also has its many strengths. For many people who have not been to a Chinese hospital, we have to first give this overview of what China's health care system is like. I think in all countries health care system, there are different problems. You know, there's a lot of debate about the US health care system. There's debates everywhere about. Different countries health care system. Overall, I would summarize [as such]: For any country, their health care system they are facing, I would say an impossible trinity or impossible triangle of three things: Affordability. That's for one thing, whether you can afford the health care. Accessibility, Whether you can have access to health care. And then the quality, both the service quality as well as the access to good adequate equipment and medicines.
[00:24:38] Robert: so if you put things into this kind of perspective, you can understand where China is coming from. You know, where China's health care system is situated in this. Basically, of the three things, China's health care system only sacrifices the last one, the quality, the service quality especially. I would say the biggest question, the biggest problem with hospitals in China is that really it's such a crowded place. There are so many patients. The doctors are very impatient. And and it's like, you know, if you go to the hospitals, if you go to the surgeries. Every time I go to hospital, I feel like I'm just a pig going through the kind of the cutting line, The I'm just a product and just go through this procedure and that, not really being treated as a human right. But I will say that's the only big weakness or big issue I find about China's health care system. And actually they sacrificed that in order to achieve the two other goal, you know, which is to make it both affordable and accessible.
What is the benefit of China prioritizing affordability and accessibility for its healthcare system?
[00:27:23] Robert: one thing people don't realize is: because Chinese hospitals are so accessible, the doctors are so busy, they're seeing so many cases, I would say Chinese doctors are way more experienced [compared with] similar doctors or similar age. [00:29:26]
[00:27:37] Mu: It's more training data.
[00:27:38] Robert: Yeah. Usually ten times more patients, more cases [than other countries]. So although, Chinese doctors, they are very impatient with you. They're really like they're not nice, but they get things done. So I think that's the setup we're facing with. But you have to realize this is also a distorted system. They distort one thing for the benefit of 2 others. One big distortion is the whole, you know, the compensation system for the doctors. The doctors in many countries are among the highest paying jobs. In China, it's more complicated for young doctors. Most of the doctors, it will be shocking to you how how lowly paid they are. Their wages are similar with, say, a factory worker. Yeah. It's sometimes even lower than that. And why? Because they are you know, the system is created for the benefit of making it affordable and accessible. Right. So but then why should doctors do this? Why should doctors do this kind of job? It's busy. It has a lot of pressure. You're facing life and death situations and you're not getting well paid.
What is the cost of China prioritizing affordability and accessibility for its healthcare system?
[00:29:57] Robert: So doctors do enjoy a lot of power. And so in a totally low paying environment. What should doctors do? All the doctors, they keep grinding and working in that environment with the hope that one day they can rise to the top. And it's basically delayed gratification for a lot of doctors. So so one distortion in the system leads to more distortions. And for a while it works. But again, it is corruption. It is corruption. Yeah. This type of corruption, once it persists, will grow into a monster of his own. And for example, overprescription. A lot of doctors will, you know, because, because they need to have some decent income. They just overprescribe for readers.
[00:32:28] Robert: I just want to let our listeners, our audience understand it's it's a it's not a one sided problem. It's a result of what the system like this is like. So and I think once, you know, every once in a while they need to reset the system. They need to, you know, try to limit the effects of their systematic distortions.