Jack Ma Says Don’t Worry About China, but Maybe You Should

October 15, 2015 Updated: October 20, 2015

Pundits keep pushing the Chinese consumer who is supposedly going to take over from the investment growth model. This time it’s Jack Ma’s turn.

In a letter to investors published on the U.S. website of the Chinese online retailer, he said: “China’s economy is transitioning from an export sales-driven economy to a domestic-consumption economy, and from investing in infrastructure to operating infrastructure. “

Same old story with the caveat that it’s just not happening.  Recent news rather supports the theory that a lack of investment spending is finally impacting the job market.  

Late September, Longmay Group fired 100,000 coal workers, or 40 percent of its workforce. 

More recently, China Daily reports some jobs are disappearing altogether:  

“The changing economic structure affects certain traditional careers. The need for professionals in certain fields declined, and some even disappeared,” Zhu Hongyan, the chief career consultant for Zhaopin.com (a think tank), told the paper. 

But the decline in jobs is not limited to blue collar jobs. According to Zhaopin’s latest competition index for white collar jobs shoed 35 applications for one position, up from 26 in the first quarter of 2015. 

 “Workers in [traditional] industries are forced to seek career opportunities in other ones, increasing competition in the market for job seekers,” said Hongyan. 

Combined with the fact that Goldman Sachs says only 2 percent of Chinese workers can actually afford to pay income tax, this should give Jack Ma pause.

But it doesn’t, as he also thinks China’s middle class is far more numerous than Goldman says. According to Ma, the middle class now counts 300 million members (Goldman says 146 million) and he thinks it will grow to 500 million in 10 years. 

He also thinks the savings of the Chinese people can be spent in a downturn.

“The saving rates in China are some of the highest in the world. During economic downturns, Western consumers may have trouble borrowing to maintain their lifestyles, but their Chinese counterparts have savings for retirement or for times of crisis. Therefore, slower economic growth does not mean declining purchasing power.”

This sounds great in theory, but he forgets that the Chinese don’t save for fun. They need to in order to shoulder all the costs for education, health care, and retirement—which the state doesn’t provide. 

Ma says about his own company: “Many are trying to understand us through the lens of an outsider and may not have a full or accurate understanding of who we are and what we do.”

Maybe the same principle applies to the billionaire’s assessment of the Chinese middle class.