Tech industry booms as workers face dim prospects : NPR

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Sometimes two things can be true at the same time, even if they seem to contradict each other. This is what is currently happening in China. The tech industry is booming, but many economic indicators and prospects for Chinese workers look bleak. NPR’s Emily Feng and Jasmine Ling explain why.

UNIDENTIFIED PERSON #1: (Non-English language spoken).

EMILY FENG, BYLINE: The enthusiasm was palpable at a recent technology conference in Beijing, with every entrepreneur or company representative eager to showcase their product.

UNIDENTIFIED PERSON #2: (Speaking Mandarin).

FENG: This research project, for example, uses artificial intelligence to repair ancient Tibetan art.

UNIDENTIFIED PERSON #3: (Speaking Mandarin).

FENG: Another company has created a chatbot that answers retirees’ health-related questions.

IQ KEYI: (non-English language spoken).

FENG: (non-English language spoken).

“Our business is brand new, but it’s growing so fast,” laughs Qi Keyi. She promotes an intelligent robotics company. These companies are all enthusiastic about the political signals sent by Beijing. Last month, Chinese policymakers unveiled their draft economic plan for the next five years. It prioritizes technological independence and the creation of an advanced manufacturing base. But Dinny McMahon, who heads research on Chinese markets at consultancy Trivium China, recommends taking a step back because the economy, he says, is on two tracks.

DINNY MCMAHON: So if you sit outside of China, China looks like it’s going gangbusters.

FENG: But in China?

MCMAHON: People don’t feel that way because it doesn’t translate into profits for businesses. This does not translate into job security.

FENG: Official Chinese statistics show that nearly one in five Chinese aged 16 to 24 cannot find work. There has been a fall in overall investment, stagnant wage growth and deflationary prices. And McMahon points out that local tax revenues have actually declined despite the growth of tech companies.

MCMAHON: And that’s because despite the success of all these new industries, a lot of industries are suffering from overcapacity and what the Chinese government calls involution.

FENG: Involution – a memorized slang term for unproductive activity. The government uses it to mean that too many companies are competing with each other in their country.

LAILA KHAWAJA: There is intense competition in China where everyone is killing each other and grabbing profits.

FENG: This is Laila Khawaja. She is a research director specializing in technology at Gavekal, a global investment research firm. She says China has proven that it is now capable of truly innovating, but that this innovation comes at a high cost. More companies than necessary are going bankrupt, and for those working in the industries of the past?

KHAWAJA: A lot of people are losing their jobs and, you know, taking pay cuts as well.

FENG: So outside of China, she says, we only hear about the survivors of this competition.

KHAWAJA: And everyone else – basically, you know, they die.

FENG: Chinese tech executives like Dong Tengfei, who works to design artificial intelligence programs that can make videos, say the benefit of this economic shift to innovative technology is that it forces China’s economy to figure out what it really needs.

DONG TENGFEI: (speaking Mandarin).

FENG: During the pandemic, he says many industries stagnated, prompting people to reevaluate whether there was actually demand for certain goods and industries. And they often found that this was not the case. Moreover, Chinese policymakers know that the country’s current economic model – which relies on cheap exports, earth-shattering real estate construction and debt – cannot support future growth. Trivium China’s McMahon says China needs new industries to grow.

MCMAHON: This allows China to accumulate wealth and get rich, even as the population shrinks in absolute size and ages.

FENG: But far from being a sure bet, McMahon says China’s growing support for its technology and manufacturing sector poses a hugely ambitious risk. Still, he says, it’s a risk Beijing must take.

With Jasmine Ling in Beijing, I’m Emily Feng, NPR News.

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