The Workers' Paradise Has Turned into a Homeless Haven... What Is Happening in China's Silicon Valley?

Most Migrant Workers in Shenzhen Become Homeless
Resident Population Declines in Major Cities Beyond Shenzhen
Foreign Companies Leave, Causing Population Drop and Real Estate Halving

Shenzhen (深?), Guangdong Province, known as the symbol of Deng Xiaoping's reform and opening-up and often called China's Silicon Valley, has recently been reported to be experiencing severe turmoil due to an unprecedented economic crisis, including population outflow and falling housing prices. On the 8th, Taiwan's Liberty Times cited a 7-minute video of Shenzhen's Longhua District posted on the social networking service (SNS) X by CEO Briefing to analyze the economic crisis in Shenzhen, China.

Shenzhen is called the first place of China's reform and opening-up. Once a poor area adjacent to Hong Kong, Shenzhen's gross domestic product (GDP) was only 150 million yuan in 1980 (based on the exchange rate at that time), but thanks to the growth of innovative industries, it surpassed Hong Kong in 2018. Representative companies such as Huawei, China's leading smartphone maker; DJI, the world's number one drone company; BYD, China's leading electric vehicle manufacturer; and Tencent (Tengxun), the creator of WeChat with 1.2 billion users, were all born in Shenzhen.

On the 8th, Taiwan Liberty Times cited a 7-minute video of Shenzhen Longhua District posted on the social networking service (SNS) X by CEO Briefing to analyze the economic crisis in Shenzhen, China. [Photo by CEO Briefing X]

However, recently, amid the economic crisis in China, Shenzhen is experiencing turmoil such as population outflow and falling housing prices. Above all, manufacturing factories in Shenzhen are relocating one after another to Southeast Asia and Mexico, making it difficult to maintain employment for about 10 million people. As the population decreased, housing prices also fell by more than 50%.

A recent video posted on SNS related to Shenzhen shows homeless people sleeping in the bustling area of Longhua District. One netizen who translated the video commented, "These people are not alcoholics or drug addicts. Most of them are migrant workers who do not have enough money to stay in hotels, so they are homeless." Another netizen said, "Shenzhen's economy is rapidly declining. Housing prices have already halved, and I am afraid the situation will worsen if the real estate bubble bursts."

Foreign Companies Leaving Major Cities in China

Not only Shenzhen but also foreign companies are leaving major cities in China. This is largely due to the global supply chain restructuring linked to the US-China hegemonic competition. In fact, from January to November last year, foreign direct investment (FDI) in China decreased by 10% compared to the same period a year earlier. This means that new investments by foreign companies have sharply declined. The real estate sector was also hit hard. According to Caixin, a local economic media outlet, based on its own data analysis, housing rents in Beijing, Shanghai, Guangzhou, and Shenzhen fell by 2.45% year-on-year in December last year.

Not only in Shenzhen, but the departure of foreign companies is also occurring in major cities within China. This is largely due to the global supply chain restructuring intertwined with the US-China hegemonic competition.
[Photo by CEO Briefing X]

As the real estate market recovery slowed, homeowners shifted to renting, increasing rental supply. Additionally, the resident population in major cities decreased during the COVID-19 period. Regarding the crisis in China, Bloomberg News analyzed, "Despite China's recent reopening, foreign investors' sentiment has weakened. Although some foreign company CEOs have returned to China, very few companies intend to invest further."

Meanwhile, recently, negative economic forecasts and expert opinions have emerged within China. In response, China's counterintelligence agency, the Ministry of State Security, announced it would crack down on and punish negative remarks about the Chinese economy, stating it would prevent attempts to trap people in the "cognitive trap" that China's economy is declining.

On the 15th of last month, China's Ministry of State Security posted on its official WeChat account (China's version of KakaoTalk), "Today, the economic field has become an important battleground for competition between countries. In this battleground, 'verbal conspiracies' aiming to decline China's economy continue to appear." It emphasized, "We will firmly crack down on and punish such criminal acts that threaten national security."

This content was produced with the assistance of AI translation services.