This special report has been prepared by Nguyen Ha Linh, Zhao Mingjun, Charmaine Magbuhos, Raphael Perri, Shen Chen and Erdenenyam.p., reporters in the Global Business Journalism program's In-depth Reporting and News Writing course.
By NGUYEN HA LINH
Global Business Journalism reporter
Ma Yibo is an employee at the state-owned Beijing Institute of Architectural Design. He has a stable job, and it aligns perfectly with the major he pursued during both his undergraduate and master’s programs. But with the recent crisis in the real estate industry in China, he has set sights on a new goal: applying for a Ph.D. degree at Tsinghua University.
Ma has always been certain about his choice of major. He spent five years majoring in architecture at Qingdao University of Technology and then two years at the University of Pennsylvania pursuing a master’s degree in the same field. Back then he had solid reasons to feel confident in his choice.
“There were so many opportunities. The real estate sector was booming,” Ma said.
But the old paths to professional prosperity are no longer working for young adults in China. Ma, like millions of other recent university graduates, has discovered that a slowing economy and a glut of university graduates has combined to stymie their careers. Ma has joined a growing number who decide to remain in academia to pursue additional degrees in a desperate attempt to give them a competitive advantage in a crowded job market.
For a generation that had grown up reading about China's "economic miracle" and rapidly rising standards of living, economic reality has been a disconcerting jolt. The shock has been particularly difficult for highly trained graduates like Ma who chose careers in previously booming economic sectors such as real estate, technology and New Media.
Ma started college in 2011, just as China’s property market was hitting its peak. The New York Times reported that a record $560 billion of resident property was sold in China that year, marking an 80% increase from the previous year. With soaring housing prices and demand, new housing units were built at an unprecedented rate to keep up with the demand. Architecture quickly became a popular career choice as the need for skilled architects skyrocketed. In the midst of this boom, Ma began his journey toward becoming an architect.
However, by the time he graduated from his master’s program, the situation had changed.
In an attempt to tackle the surging housing bubble, Beijing implemented the “three red lines” policy in August 2020. This policy aimed to curb developers’ ability to accumulate excessive debt, but it triggered a severe cash crunch in China’s real estate sector. Many major developers, including Evergrande and Kaisa Group Holdings, found themselves burdened with enormous debts.
As a result, in November 2021, the cost of newly built homes in China experienced a significant 0.3% monthly decrease, marking the largest decline since February 2015, according to Reuters. At the same time, the construction of new projects also plummeted by a staggering 21.03% compared to the previous year, continuing its downward trend for the eighth consecutive month.
“Everything was getting worse, and it showed in the salaries,” Ma said.
After getting his master’s degree from the University of Pennsylvania, Ma returned to China and started to work for the Beijing Institute of Architectural Design, one of the earliest established architectural institutes in China, in 2019, with a starting salary of 6,500 RMB per month after tax.
To put into context, in 2019, the average rent for a one-bedroom apartment in Beijing was around 5,500 RMB, according to the South China Morning Post, while the cost of living without rent for one person was around 3,000 RMB. It means the salary Ma received wasn’t even enough for him to make ends meet in the capital city.
Despite setting low expectations after observing the gloomy atmosphere of the real estate industry in China, Ma still couldn’t help but feel disappointed with the salary he got.
“Considering all the money and time and energy I spent on my study, the income was so low,” Ma said with disappointment. “It was four times less than what I got just from doing an internship in the US.”
His disappointment is understandable. The University of Pennsylvania, where Ma pursued his master’s degree, is among the top universities in the world, ranking 13th in the QS World University Ranking 2023. The average tuition fee of a master’s degree program for one academic year is around 60,000 USD (around 414,000 RMB), according to the school’s official website – almost 5.5 times more than what Ma could earn annually in China.
While initially accepting the job knowing that it was the general situation of the whole industry, Ma knew that he needed more to advance further in his career.
“When you feel the industry is declining, you want to find other possibilities,” he said.
Amid what seems to be a gradual recovery, the property market, once teeming with promise and prosperity, is still far from returning to its heyday. Data released by the National Bureau of Statistics revealed a 3.6% year-on-year decline in home sales by floor area during the first two months of 2023.
Fewer buildings are constructed, yet the number of architects working in the field still remains high. With fewer opportunities in the industry, Ma finds himself grappling with the realization that his current skills and knowledge cannot bring him far in the field as competition is getting fiercer.
“I need to pursue a Ph.D. to get ahead in the current industry,” he said.
Currently waiting for the official admissions decision from Tsinghua University, Ma envisions a more hopeful future after acquiring his doctoral degree.
“I expect a monthly salary of 30,000 RMB after tax when I finish the Ph.D. program,” he said.
It’s reasonable to expect a higher salary with a higher academic degree. But with more and more students sharing the same thought of seeking new possibilities by going to graduate school, uncertainties are certain for people like Ma.