Eric Li, a mid-level manager at a state-owned enterprise in China, recently sold his two-bedroom apartment in Tianjin for 2 million yuan (US$275,700), only about 20% more than he paid for it 12 years ago.
After accounting for renovation costs and interest payments, the investment yielded little to no net gain. Still, Li considers himself fortunate compared to those who bought property in China after 2015.
“At least I didn’t lose money,” he said.
Now, Li faces a new challenge—deciding where to invest the proceeds from his sale. With housing prices in most Chinese cities still declining, real estate is no longer a viable option. He has considered US dollars, gold, and Hong Kong stocks, but even these once-reliable safe havens have become increasingly volatile due to global economic instability.
Li’s uncertainty is shared by many in China’s middle class. For years, they viewed investments as one-way bets, benefiting from the country’s long economic boom. But as markets become more unpredictable, those assumptions are being challenged.
“They’re shocked at the lack of prospects,” said Simon Zhao, associate dean at Beijing Normal University-Hong Kong Baptist University United International College.
“Never before did they imagine that their primary source of wealth—real estate in major cities—would shrink so drastically. The unforeseen real estate crisis in China has left them reeling.”
Zhao noted that, in the past, many financial decisions were based on the assumption that property values would keep rising. Now, with that foundation crumbling, investment options are limited, and the cost of trial and error is higher than ever.
The changing financial landscape is clear to Li.
“Three or four years ago, a 1 million yuan investment in bank-guaranteed financial products could generate at least 40,000 yuan in annual returns,” he said. “Now, it barely earns just over 10,000 yuan. Meanwhile, real estate and traditional industries seem more likely to lead to losses.”
Li had hoped to open a Hong Kong stock trading account to invest in stable, dividend-paying companies. However, Beijing’s strict capital controls have made it difficult for mainland residents to deposit large sums in Hong Kong.
At the same time, the volatility of mainland stock markets has made many retail investors more cautious. The CSI 300 Index, which tracks 300 of the largest stocks in Shanghai and Shenzhen, gained 15% last year, but most of that growth came from a dramatic 25% surge in the final three months of a turbulent year.
“Last year’s fluctuations were too drastic. I can’t build confidence in the stock market,” Li admitted. “I only dare to make very small, short-term investments.”
Traditionally, China’s middle class has turned to the US dollar and gold during uncertain times. But these markets are now fraught with risk as well.
Penny Lin, an account director at a Shanghai advertising firm, converted 364,000 yuan into US$50,000 at an exchange rate of 7.29 in December, placing it in a one-year fixed deposit with a 4.5% interest rate.
“At the time, I thought dollars were the safest bet, and my friends were predicting the exchange rate would reach 7.5,” she said. “But now, concerns about the dollar depreciating are growing, and I’m unsure what to do when my deposit matures.”
Gold, long regarded as a “hard currency” by Chinese investors, has also become a tricky investment. Guangzhou-based engineer Arthur Kou has been buying gold for the past year, but with prices soaring, he is now unsure whether to buy more or sell at what could be a peak.
The decline in luxury watch prices further illustrates growing pessimism about wealth accumulation.
“The falling value of high-end watches reflects how uncertain people feel about their financial future,” said Stephen Liu, a Shenzhen-based tech executive and watch collector.
Once considered a status symbol and a stable investment, luxury watches have lost significant value. One Rolex model that peaked at 1.2 million yuan dropped to 800,000 yuan by 2022 and now sells for just 420,000 yuan—a nearly 50% decline in three years.
“In the past, my colleagues and friends saw luxury watches as better investments than yuan, bitcoin, or dollars,” Liu said. “Now, even at lower prices, buying them feels risky, and the chances of appreciation are slim.”
Some investors in Shenzhen’s tech industry still allocate funds to Hong Kong-listed stocks, particularly in emerging sectors.
“But the general sentiment is that investing this year requires more caution than ever before,” Liu added.
As China’s middle class navigates an increasingly uncertain financial landscape, their once-reliable investment strategies are being put to the test. In a world where traditional safe havens are no longer guaranteed, many are left wondering: where can they turn next?