(Bloomberg) — Ivy Zhang figured she had it made.
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Fresh out of school after studying chemistry, she joined one of China’s biggest property companies in 2016, as the country’s real estate market was taking off. She worked until 11 p.m. every day and was transferred to a bigger city after being designated a “sales champion.” She pampered herself in her limited time off by regularly buying $550 spa packages. Money was so plentiful that she didn’t have to think about it much. “The bank account was just a series of numbers,” Zhang says.
Everybody wanted what Zhang and her colleagues were selling. Owning property was so essential it was often a prerequisite for marriage. Prices never seemed to fall, so condos served the combined functions of wealth storage, insurance and retirement savings. Real estate at one point accounted for about a quarter of gross domestic product, according to Bloomberg Economics. Some estimates were even higher.
But those heady days didn’t last. Even though President Xi Jinping warned that “houses are for living in, not speculation,” by 2021 developers were selling homes faster than they could build them and piling on debt in search of expansion. When the government suddenly cracked down on borrowing, it all fell apart. Many homebuyers were left waiting on stalled construction, sparking angry protests across the country. Developers including Country Garden Holdings Co. and the collapsed giant China Evergrande Group defaulted on bond debts. Government revenue plunged. Images of tracts of empty buildings and uncompleted public works became global symbols of the nation’s waning confidence and disgruntlement with Xi’s handling of the world’s second-largest economy.
And a cohort of young professionals who thought they’d found an escalator into China’s affluent middle class had their life upended. What seemed like a lifelong career turned out to be a moment in a bubble. The slump has tossed some 500,000 people out of the property sector in the three years through 2023, according to Ke Yan Zhi Ku, a real estate research group. That’s not counting workers in related industries such as construction and marketing. They’re all facing setbacks in the middle of their careers, forced to make skill adjustments “on an epic scale,” says Alex Capri, senior fellow at the National University of Singapore. “The property meltdown is feeding a wider sense of somber reflection.”
The days when some real estate companies doled out Mercedes-Benzes as yearend bonuses are a distant memory, but many analysts say this isn’t rock bottom yet. The housing sector’s economic heft may shrink to about 16% of China’s GDP by 2026, according to Bloomberg Economics. That possibility threatens to put about 5 million people—equal to the population of Ireland—at risk of unemployment or reduced incomes, the analysts wrote. Even young workers in their prime are struggling to find jobs, with the youth unemployment rate reaching 15.3% after China revised its data methodology. “People are very depressed and scared,” says Anne Stevenson-Yang, co-founder of J Capital Research Ltd. “The situation is very severe.”
Zhang, 30, who says she helped sell almost 1 billion yuan ($139 million) worth of apartments for Country Garden, has resorted to peddling health supplements on social media to pay the bills. So far she’s earning nowhere near enough, selling three items a month. It’s a far cry from the days when she earned as much as the equivalent of $83,000 a year. She and her husband have postponed having a baby, and she scours the web for discounted offers, cooks her own meals to avoid takeout and minimizes socializing to cut expenses. “If you still want to live like before, you’re basically dreaming,” Zhang says. “If I spent 3,000 yuan in the past, now I’m looking to see if I can cut it down to 2,000. Then I’ll see if I can cut it to a thousand. As long as I can survive.”
The pain isn’t limited to salespeople. Ivan Li, 28, lost his position as an investor relations manager in Hong Kong twice. Most developers stopped issuing dollar bonds in the $203 billion market, among the biggest in the world for high-yield debt when times were good. Investors ceased buying the asset class as prices cratered, and communication between debt holders and companies petered out. “Gradually, as the crisis grew, you could feel that engaging with the likes of overseas investors and analysts became the least of management’s concerns,” Li says.
Charlie Zeng, a former worker at developers including China Vanke Co., who in a good year earned the equivalent of more than $250,000, spent a year looking for work. In his most desperate moment, he volunteered to…
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