How Young Chinese Are Trying to Strike It Rich

Wealth management is becoming gamified among young Chinese

崇尚理财的年轻人越来越多，但以追星的热情理财，财就会理你吗？

Young investors have shown a penchant for investing in stocks of baijiu (rice wine) companies, as well as technology firms

“The biggest change I made in 2020 was that I learned to manage my finances!” Yang Shuhua, a motormouthed video blogger in her 20s, chirps on streaming platform Bilibili, where she has nearly 500,000 fans.

Using quick cuts, gifs, and kitschy sound effects, Yang’s video details how she chose four mutual fund accounts and three stock trading platforms. It’s a big departure from her usual fare of skincare tips and hairstyle reviews, but a successful choice: Yang’s video about finance is one of the hottest on her channel, with over 460,000 views at the time of writing.

While China’s young urbanites used to chase celebrities, now they are chasing premium savings advice. That includes the best returns on their money, the most trustworthy fund managers, and the best video consultants offering investment tips and recommendations.

Unlike their parents’ generation, which favored real estate and directly purchasing stocks, this new generation of investors are obsessed with mutual funds (funds managed by professionals who place investors’ money into stocks for them). Investing has become a source of entertainment, with many young Chinese considering it a social activity or hobby.

Choosing funds or stocks is part of the fun, as is the adrenaline rush of seeing their value rise or fall. “I don’t like to have my account set to invest money at a fixed time, because it’s not very interesting that way,” says Huang Xinjie (pseudonym), an office worker in Guangzhou in his 20s.

These young investors are driving a new boom in mutual funds in China. Last year, the value of funds increased by 37 percent, while over half of new investors in mutual funds were under the age of 30 according to the China Household Financial Management Trend Report, a joint publication by state broadcaster CCTV and mobile payment app Alipay.

Young investors can track their stocks on a variety of mobile platforms

Over 40 percent of those born in the 1980s (“post-80s”) or 1990s (“post-90s”) claim to check on their investments every day, according to the report. Meanwhile, a report from 2019 by China New Economics Research Institute, affiliated to China’s State Council, showed that on average, Chinese born in the 90s start managing their money 10 years earlier than their parents’ generation did. This new generation of investors are also likely to have more money to invest and be more accepting of risk than their parents, as many are only children from more affluent areas of China, who marry and start their own families later.

Online content related to financial management, or licai (理财), has boomed, including video blogs and articles offering investment tips. In January 2021 alone, over 30 hashtags related to financial management became trending topics on the microblogging platform Weibo. On Bilibili, the number of views on videos related to licai grew by 464 percent in 2020 from the previous year.

Fund managers who have successful track records have gained celebrity status among investors, who follow their every move for clues as to where they should put their money. Zhang Kun, a fund manager and analyst at E Fund Management, who was the first fund manager in China to oversee over 100 billion RMB of assets, has amassed an army of followers who call themselves “iKun,” a homophone for “Love Kun.”

“You can make only about 2 to 3 percent return with the banks, but you can get maybe 5 or 6 percent on Yu’e Bao,” says Huang, referring to Alipay’s money market fund, which encourages users to invest their spare change in short-term financial products.

Huang began investing in early 2020, mainly as a way to stay productive while socially distancing at home during the Covid-19 pandemic. He invests mainly in mutual funds with managers who have a long-term record of good yearly returns, and in industries that he feels have a “large scope for development,” such as green energy and technology. Since then, he has made between 10 and 20 percent return on investments, numbering hundreds of thousands of yuan.

That return is emblematic of a year in which Chinese stocks saw healthy growth despite the Covid-19 pandemic. The number of equity funds that doubled their earnings in 2020 was 89, the highest number since 2007. The Shanghai Stock Exchange was up 13.8 percent in 2020, while the Shenzhen Exchange rose nearly 40 percent over the year.

But the boom times didn’t last. Stocks have fallen since the Chinese New Year in 2021, with some stock falls dramatically wiping out the gains young people had made over the last year. Many were surprised at losing so much so quickly, and some worry young people are investing without knowing the risks.

“I’ve lost money,” Chen Jiawen, a “post-90s” worker in Beijing, tells TWOC. Chen’s investments, which add up to a seven-figure total, are down about 20 percent overall since she began managing her money in early 2020, also as a way to kill time during the pandemic. “I think whether you make money or not is down to luck, it really has nothing to do with what research you do,” she laments.

The February 2021 slump taught Chen and others a painful lesson. Many first-time investors didn’t fully understand what they were getting into, and some have even been victims of fraud by companies offering financial management courses only to take customers’ money and then disappear.

Some of the new video bloggers on social media offering investment recommendations have no relevant qualifications. Referred to as “financial management gods” in popular culture, these bloggers don’t always give good advice, or just report trends so widely known that they are worthless. “They invest 10,000 RMB, make a return of less than 5 percent a month, and then teach people how to buy funds on Bilibili, gain 200,000 fans, and start a fund group on [messaging app] QQ that they charge 200 RMB a month for!” complained one user on Weibo.

These bloggers occupy a legal gray area. Those who accept money for investment advice require a license from the China Securities Regulatory Commission (CSRC), but it’s unclear whether this applies to online bloggers who don’t call their videos “advice,” or who take “donations” from fans in lieu of direct payment.

As fraud and losses have become widespread, there have been growing calls for better education in money management. In 2019, the All-China Women’s Federation urged parents to educate children on responsible spending from an early age. The same year, the CSRC outlined a plan to offer financial literacy courses in primary and secondary schools nationwide. Chinese citizens still allocate far less of their wealth to financial products than their peers in developed countries, according to a 2020 report released by Huaxia Hengtian, a venture capital firm.

Lack of education means young Chinese investors are often quick to follow trends or invest based on advice from online bloggers or financial celebrities, like Zhang Kun. Both Chen and Huang are self-taught investors, having received little or no financial education at school. “I don’t really understand it,” says Chen. “To start with, I mostly chatted with my friends and got their recommendations, then later I felt I could rely on myself to analyze government policies and choose where to invest accordingly.”

But for many young investors, licai isn’t just a wealth management strategy. “It has become a hobby,” Huang says. For Chen, similarly, it was not just about making money: “I also wanted to find out how these funds worked.”

Financial management has become a social affair too: “At the end of last year I discovered that, while we would never talk about money or money management before when we ate lunch at work, now we talk about it a lot,” says Chen. Online forums and discussion groups on licai also abound, with users posing questions, discussing investment tactics, showing off their returns, and even chatting up fellow investors for dates.

Beyond giving people the time to study their finances, the pandemic has also heightened young people’s anxiety over their economic position. “Like many people, I faced a reduced workload and income during the pandemic. This made me realize the importance of having money you can make in your sleep,” Yang quips in her video. In March 2020, a survey by Zhongyan Research Institute showed that 57 percent of those born from 1990 to 1995 intended to budget more carefully in future.

The fun and social element of investing may be wearing thin, now that returns have slumped, and it remains to be seen whether young investors’ interest holds now that the pandemic is largely under control.

For Yang, at least, the investment bubble has burst: “In Half a Month, I Lost 20,000 RMB!” reads the title on her latest vlog. Yet she still managed to get 23,000 views in under a week. As one comment reads online, “You can make more money teaching other people to buy funds than buying funds yourself.”

All images from VCG

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