What a viral post about giraffes says about satisfied Chinese investors

Like many Chinese, Jacky hoped he could make enough money investing in the Chinese stock markets to afford an apartment in a big city. But in 2015 he lost $30,000, and in 2021 he lost $80,000. He then closed his trading account and started investing in Chinese funds that track stocks in the United States.

These are dangerous times for investors in China. Their main vehicle, the so-called A shares of Chinese companies, fell more than 11 percent in 2023 and have continued their losses this year. Many investors have instead turned to the exchange-traded funds that track foreign markets and have performed much better.

Putting money into stocks is inherently risky. But Chinese investors are experiencing something particularly alarming: financial losses in the markets, falling housing prices and a government that doesn't want public discussion about what's happening.

With their frustrations mounting, Chinese investors recently found a way to vent that wouldn't be easily censored. They started leaving comments about a harmless one message about giraffe conservation on the official Weibo social media account of the US Embassy in China. They lamented the poor performance of their portfolios and revealed their broader despair, anger and frustration. The giraffe post has been liked almost a million times since February 2, far more than what the embassy's Weibo posts usually get. Many of the comments also expressed admiration for the United States, but also dissatisfaction with their own country.

“The performance of various stock markets reflects the distances between America and China in terms of national power, technology, humanity and sense of well-being,” one commentator wrote.

The comments reveal a growing loss of confidence among the Chinese public in the stock market, the country's economic prospects and the Chinese Communist Party's ability to govern.

“Their reactions are not just about losing money in the markets,” said Jacky, a manufacturing industry analyst who earns half of what he did two years ago and juggles several jobs. “The venting probably serves as an outlet for their built-up frustrations in life.”

Another investor I spoke with, Leo, a portfolio manager at an asset manager in Beijing, has been investing in the Chinese stock markets for almost a decade. In November he started closing his positions. Now, like Jacky, he places his bets on foreign markets.

Leo said he always hoped that Chinese internet giants Alibaba and Tencent would become $1 trillion companies like Amazon, and that investors like him would benefit from their growth. “That dream was shattered” after the government cracked down on the technology in 2020, he said. “I can only look at the overseas markets now.”

The U.S. Embassy's Weibo comments section once served as an online punching bag for nationalist Chinese who blamed the United States for their country's problems. Now it is called the Western Wall of Chinese A-share investors.

“Under the protection of the US government,” one commentator wrote, “the giraffes are 10,000 times happier than Chinese stock investors.”

In a tightly controlled society like China's, it is rare to see such a robust expression of public sentiment. The comments could also serve as a harbinger if the economy does not recover quickly. Despite being bombarded by propaganda and intimidated by the government, people can continue to question their government and find creative ways to express their dissatisfaction.

It is always difficult to gauge public sentiment in China. People dare not say anything critical about their government in public. Now even critical comments about the economy are censored and punished. That's why both Jacky and Leo have asked me to only use their English names, for fear of reprisals.

Still, online outbursts from large groups of people can offer clues about public sentiment. Take, for example, the grief that followed the death of Li Wenliang, a doctor who blew the whistle in the early days of the pandemic. And widespread mourning following the unexpected death last year of former Prime Minister Li Keqiang, a reformist politician who accomplished little under the country's leader, Xi Jinping.

These episodes showed that the public disapproved of the censorship and had doubts about the direction Xi was taking the country. The comments on the US Embassy's Weibo account belong in this category.

Valuable insights into what people are feeling occasionally emerge in unexpected places. A recent study by the Research center for public opinion of the canton offered a bleak picture of the southern city of Guangzhou, a metropolis of almost 19 million inhabitants and a center of technology, manufacturing and trade. A 2023 survey of 1,000 residents found that the city's “economy and society were facing unprecedented challenges and pressures.”

According to the research center's report, due to unemployment and falling incomes, residents' assessment of the economy was as low as in 2015, when Chinese markets plummeted. Satisfaction with private sector growth fell below 30 percent, the lowest level since the question was first asked in 2008. Most residents said they did not expect their incomes to improve by 2024, and more than 20 percent said they thought this would be the case. will “probably” lose their jobs.

Reporting on the investigation was censored and the report cannot be found at the center website.

The survey results would not be surprising to investors.

Jacky, in his mid-thirties, lost his job at a private equity firm in 2022. He had to take a significant pay cut when he returned to production. He fears he is “about to fall off a cliff.”

Leo, who was born in Beijing in the mid-1980s, said he grew up as a nationalist “little pink.” According to him, the first crack in his confidence occurred in 2021, when the government went after internet companies. The second crack emerged when the government abruptly ended its 'zero-Covid' policy in December 2022 without preparing the population with effective vaccines or medicines. At the end of July, markets and the private sector were unresponsive to government measures to stimulate the economy.

Leo's change is remarkable. He said local Beijing residents like him and the people he went to high school with were among the strongest supporters of Communist Party rule because they benefited from the city's expansion and the growth of the country.

When a group of Leo's classmates met in June, he said, they couldn't believe two of them, a couple, were migrating to Canada. When they met again last month, he discovered that some of his classmates had opened bank accounts in Hong Kong, which, unlike the mainland, has banks connected to the global financial system. They asked him how they could convert their renminbi savings into US dollars and transfer them to Hong Kong.

“They are preparing for the worst-case scenarios,” he said. “No one laughed anymore about the two classmates who migrated to Canada. In fact, we are jealous of them.”

I asked Leo what would have to change before he could invest in the A-share market again.

He said the major problems that had prompted him to flee remained unresolved: the imploding real estate sector, massive local government debt and a rapidly aging population.

He said he wanted the government to loosen its grip on private business and disband Communist Party branches that had spread within companies, and that he wanted the private sector to start investing again. Until then, he will keep his money out of the Chinese markets.

And what investment advice would he give to his family and friends? “Run as fast as you can,” he said, “even if you are losing.”