The ten years of a Chinese middle class

| February 20th, 2011

20100220-middle-class

From Netease:

Autumn of 2000, 26-year-old Michael carried his luggage and hopped onto a train going to Shanghai.

He had just graduated with his masters in communication engineering from a well-known university in Nanjing.

“In 10 years, my annual salary will be over millions (RMB)” Michael set a goal for himself.

In 2000, IT communications boomed in the land of China. As Huawei, ZTE, Bell and other enterprises rapidly expanded in the country, they have recruited many engineers from major colleges and universities in the country.

Michael got an offer. As an engineer with masters at the R & D department, his monthly salary was 7200 yuan.

In the beginning his life was more like an extension of his college life. He was trained and worked with some same year college graduates. Then they were transferred to different departments. “We got along very well, we played ball, ate and did other things after work.”

Michael was very frugal, “I only spent 1000 a month, including the 500 rent that I pay for my shared apartment, and I save the rest of the money.”

He was already thinking about very realistic issues. After a year of working, his parents back home at Ningbo already urged him to think about buying a home. His searching target was Xinzhuang – south west suburb of Shanghai, a place where people from Zhejiang “the new Shanghainese” gathered. In 2002, he once looked at a newly built building, cost 4000 yuan per square meter. One year later the house prices there rose nearly double.

House hunting was delayed, because Michael’s girlfriend at the time was still not graduated. This girl was from the same school as him, she had just started her graduate study. According to Michael’s plan, after girlfriend graduates and goes to shanghai to work, he will then buy a home base on where two of them work, then get married in this city, have kids and start a family.

Other than talking on the phone, his girlfriend would take the train to Shanghai from Nanjing every month to see him. When two people are together, Michael talked about the most important things he thought – housing, expenses and their future…

“Whenever I start to talk about buying a house, she would say ‘What? We have to buy a house? Must take a loan? 300,000, and takes 30 years to pay off?” Michael imitated his girlfriend’s reaction and expression.

In 2002, Michael’s company had a major reorganization. His department was moved to headquarters in Shenzhen to be combined with another department.

“All the co-workers in shanghai didn’t want to go, so we started to fight with the upper-management, trying to stay.” However it was unsuccessful, some people chose to resign. Michael also wanted to quit, finding another job was not a problem, but he faced with a labor contract, if he resigned then, he had to pay the company’s training cost of 19,000 yuan.

In Shenzhen, Michael worked while quietly looking for the next home. “When in April, I got the year-end bonus. I immediately withdrew the money and submitted my resignation to my boss.” Michael bought back his “freedom” with the end of year bonus.

After quitting for 3 months, he went back to Shanghai on a Friday. Same night, he called his girlfriend, however, on the phone, she told him the news – she had already fallen in love with someone else, and the other guy gave her more romantic feelings. She could not continue this relationship that constantly was planning for house, kids and expenses.

“It was as if I was stabled on the back by a knife.” Michael was completely shocked. Unwilling to give up, Michael spent a year trying to fight and save the relationship. But before his 29th birthday, Michael officially gave up and ended the relationship.

Other than work, Michael worked out when he was free. “I swim twice a week, play badminton twice a week, trying to vent my emotions out.” He lost a lot of weight. “I lost 12 jin.”

The millionaire bubble

Life goes on.

After a tough weekend, Michael went to the new company on time. He became a mobile service add-on company’s technical Manager.

Since 2002, SP (Service Provider) became popular as number of Chinese mobile phone user base grew quickly. SP companies made a lot of money. From 2002 to 2006, almost all Chinese mobile phone users were harassed by all kinds of spam messages. Many people found their phone bills have variety of inexplicable deductions.

When the SP businesses dream to strike rich, Michael and his engineer co-workers were also excited about the dream of over-night millionaires. “We have signed the option agreement.” “According to the IPO valuation at the time, we could have bought my house now (3 million RMB).”

But it did not last. August 2004, Michael’s company received a penalty notice from China Mobile. At the time 4 largest SP companies were fined. Subsequently, the Ministry of Information Industry and China Mobile started to reform SP businesses. With the SMS tariff regulation, mass consolidation, SP’s business continued to suffer and never recovered.

“Unfortunately, one step too late.” Michael said, “At the time, our type of companies really survived in the gray area of the policy. Once the policy tightened up, it was a dead end.”

When he realized his career was like his love life- declining was irreversible, Michael immediately resigned, and jumped to a world famous IT giant.

In 3 years, Michael’s personal life also had many changes.

One day, Michael accidentally received a girl’s wrong dial. He liked her voice and saved her number. Since Michael was single, he started to chat with her and eventually met her in person – the girl was pretty and with very good personality.

November 2003, the “miss-dial” turned into fruitful love – two of them established relationship. The new girlfriend was 7 years younger than Michael. She had just graduated from the university. “She asked me for love that is like when they were in school, and asked me to wait for her for 3 years. At first I was uneasy, but after I went back home and thought about it seriously, I agreed.”

“No matter whom you marry, have to buy a house.” End of 2004, with this kind of thinking, Michael began to look for houses. In early 2004, he bought a 3 bedroom apartment in Xinzhuang, 116 square meters, cost him 600,000 yuan. His down payment was 60%, his parents and him paid half each. “We borrowed 200,000 total, at the time the whole family was not used to borrowing money from the bank.”

Compare to a year ago, the house price in Xinxhuang has doubled again. Since then, Michael’s mother had one more reason to “hate” the first girlfriend that dumped Michael – she delayed her son from buying a house.

Buying a house in one year, next year renovate, next year prepare for the wedding. 2006, 32-year-old Michael became a husband with a beautiful wife, a house and a car.

He was also gaining weight along with his happiness.

Today Tomorrow

With the typical smarts of Zhejiang people, Michael has slowly figured out the large multinational company’s system and processes. In 3 years of time, he was promoted to a second-line manager. Now Michael let a team of more than a hundred people. Last year his department was the most profitable business sector.

He was also familiar with the complex multinational company personnel politics. Michael had 6 different bosses, two of which wanted to “exterminate” him, “because I was not their direct line. But in the end I survived.”

Last year, a second-line manager in the Northwest region “took out” his boss. This made Michael a little bit uneasy: was he too eager, or his team members are too loyal to him that would make his boss uneasy?

Michael joked that he is a man that satisfies easily, has not much of ambition and lust for power. However, “my wife has higher demands. She feels I should seek higher office at work. All these years, she pushed me to go up.”

“She demands of financial freedom more than I do, always feels that the financial situation at home was not to the point that can make her relax. She could not buy anything she wants and could not travel at will.” After 2 more months a new addition will arrive to Michael’s family. “She calculated, raising a child is five or six thousand a month, and much more later.”

Michael drives a normal car. In 2010, he thought about getting a new car, some people in his team drove a Mercedes Benz. “My wife did not agree, said this car only has 60,000 km, you can drive for 2 more years, no need to spend the money.”

As the main source of income, Michael holds the financial power in the house. “I have very detailed financial statements, assets and liabilities, profit and loss. I know every expense of the family within 100 yuan.” He does not buy stocks or houses. His money is spent on investment to companies of his areas of expertise.

In 2007 stock market madness, Michael was calm. “I never put money in areas out of my expertise. If some people are expert of securities, and if I go in, I will be slaughtered. Even the old ladies in the farmer’s market have their channel of information. It tells you this is a huge casino.”

In 2008, his friend Clara family bought a 50 square meters apartment in Lujiazui area in a good school district where has the first-class kindergarten and primary school in Shanghai. The price was 19,000 yuan per square meter. Now the housing price in that area went up to 36,000- 37,000 per square member.

When heard Clara couple invested in education for their child, Michael’s wife had a new passion – “she also urged me to buy a home in good school district, she felt the pressure that the saving continued to depreciated, and we must buy another home.”

“I told her, do feel too much pressure that does not exist yet. There are also risks on the housing market. Even if there is a need, should be after 6 or 7 years.” Michael’s parents are retired senior engineers. There are two houses back at hometown. After couple more years, Michael will take his parents to Shanghai.

What worry Michael were his wife’s parents. Last year, mother in law had a fracture due to a fall, and treatment was not covered by health care, Michael ended up paying 20,000 yuan in medical expenses. “They are the most common retired factory workers in Shanghai, health care are very low, I am considering to buy them insurances.”

In recent years, more and more of his close friends, colleagues immigrated to other countries. Two years ago Michael also considered this. For the future, he was full of uncertainties. “Maybe tomorrow we will be unemployed, maybe tomorrow terrible things will happen, I read ‘three years of agitation’, many changes have occurred to rules of the game in this country over the past 30 years. Houses, stocks, these things are not reliable.”

Almost every day Michael’s pregnant wife avoids reading news like demolition murder, black market, petitioners being confined to mental hospital… these news are not far away from their lives…

The same day, local newspapers reported that a Shanghai Municipal Government’s announcement on the application of land use rights. After the expiry of the land use rights, according to “Shanghai State-owned construction land use rights” state can take the land back without compensation.

This means 70 years later, Michael and Clara will lose their houses.

Michael’s plan was to achieve his goals through his company’s internal redeployment. “We can get benefits for family, housing, car rental and medical insurances.” “I will have all the pay-off organizational relationships stay in China so that even if there is layoff in the U.S. we will not be affected.”

Two years ago, Michael already started to place his team systematically one by one to the United States. “From east coast to west coast, there are many of my people.” He now knows clearly about the living cost of most major cities in the United States. “Living in LA, 1000 USD can rent an apartment; working in New York, 1000 can rent a small house in Virginia…” The end of this year, he will take the opportunity to travel to the U.S.

He plans to have two children, “the first born in China, the second ready to be a U.S. citizen.” “When the day RMB goes backwards, I will exchange everything into dollars.”

He took out his iPhone – the former girlfriend replied on his micro-blog, “Too bad I am not an Apple-Fan”.

Michael smiled. 10 years, he changed 3 jobs and kept going, even though he was once in pain, he never stopped for a day.

“Never reach the million annual salaries, but I don’t care anymore. After struggling up to my age, I just want to slowly walk with my wife more, broaden our horizons. The next 10 years, I hope to live more for myself.”

15 Comments | Leave a comment | Comment feed

  1. Lou Minatti says:

    I am keeping my fingers crossed for Michael. He sounds a lot like me, only trapped in a more volatile country 7,000 miles away.

  2. Curren$y says:

    This Michael guy sounds like an asshole, fuck this guy man

  3. richardsgo says:

    He sounds like a homely kinda guy; he has pretty much “bare” his life story onto the internet. I wish him the best!

    richard

  4. luke says:

    all the best for michael. but soon he will find out us is not his paradise. it just a different country

  5. Crystal says:

    Good story.
    Although the title is a bit misleading: not sure that Michael represents “Chinese middle class”.

    • Chloe says:

      I’m not very familiar with China. Just curious, what characteristics do you think represents Chinese middle class?

      • xmq_jpm says:

        What is not middle-class is that he would have a plausible shot at working in the US with “”expat status””. What is typically Chinese is that before having 10 years experience he thinks he is the top dog/backbone of a large multinational, planting his loyal ‘people’ here and there. It will be even more typical when he fails to live up to his dreams and his wife’s ambitions.

  6. SwiftAzure says:

    Such a pussy. Man up and take care of business.

  7. Cleo says:

    His skill set makes him reliant and vulnerable by only being hired into companies never qualified as a consultant or one man shop. I agree with his wife that they don’t have financial security. They would be bored in Middle America however where they could live securely and comfortably.

  8. Cleo says:

    I think we need to remember that being middle class in China is poor by American standards so they can’t afford as much as we can. So when I am back in China, I will pick up the tab for sure and tip extra well too. I don’t envy them.

  9. dubz says:

    Check your grammar son!

  10. X_X_A_A_N says:

    This guy really does sound like a jackass, maneuvering “his people” into place and manipulating his money.

    Sounds much like one of my friends in fact, and both have the English name Michael, and both majored in electrical engineering. In fact, other than one is in Shanghai and my friend is in Beijing, they have the exact same life story.

  11. personal trainer says:

    A very good read – the sad desperate lives of New China – no feelings of meaningful joy. Only the happiness of a supposedly demure GF that eventually turns into a typical mainland harridan and then satisfying the filial piety of yet another newborn.

    The website mylaowai.com has a brilliant 3-part story of a privileged Chinese Joe-Bloggs.
    http://mylaowai.com/2007/06/28/this-is-your-life-wang-xiansheng-part-1/

    Very accurate and very sharp.

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