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Recently, the results of the fifth national economic census were released, which comprehensively investigated the situation of major industries in China. Which industries are shrinking and need to be cautious when entering the industry? Which industries have new opportunities and brighter employment trends and future development? These questions are related to your employment and future, so today and tomorrow, we will answer these two questions respectively. If you are considering changing industries, finding a job, or choosing a major, you should listen carefully to these two lectures.
Before I start, let me first talk about why the “Economic Census” report deserves your special attention among many Chinese economic data. This report is issued every five years, and the next time you see such a report will have to wait until 2029. More importantly, it is of high quality. The economic census is a “carpet-style” inventory, and some information hidden in the dark will be exposed.
The “Economic Census Report” is equivalent to the “full body check report” of the national economy. When reading such a report, you should pay attention to both the sick and the growing areas, and both the symptoms and the causes. In this class today, we will first talk about which industries are facing a contraction trend to help you avoid pitfalls; in the next class, we will focus on which industries have shown an expansion trend to help you find opportunities.
Okay, let’s get started.
Five major industries are facing drastic contraction
First, let’s make a key judgment: From the big trend, industrial workers are becoming more and more difficult. Compared with the past five years, the tertiary industry, which can be simply summarized as the service industry, has added more than 80 million people; while the secondary industry, which can be simply summarized as the industry and construction industry, has reduced more than 5 million people. This process is actually the “economic transformation” we have repeatedly mentioned. A large number of ordinary people have actively or passively turned from the secondary industry to the tertiary industry, and from manufacturing blue-collar workers to service industry blue-collar workers.
But “economic transformation” does not only affect the industrial structure, but affects every subdivided industry. Therefore, I have specially summarized 5 industries that are facing employment contraction: they are real estate, insurance, mining, labor-intensive manufacturing, and automobile manufacturing. Next, let’s talk about them one by one.
Let’s talk about the first one first. The current general trend of the real estate industry is overall contraction, but there are some small opportunities emerging, such as property services. I will talk about these opportunities in the next lecture. Students who are interested should remember to pay attention.
Back to the overall contraction trend of real estate, the report shows that the secondary industry housing construction industry has reduced by about 10 million people, and the tertiary industry real estate development and operation has reduced by 1 million people. This is not difficult to understand, because there are fewer “house-building” projects. In 2024, the construction area will continue to decline by 11%, indicating that the real estate industry has not “recovered”, and the number of employees in these two industries will continue to decline.
Here is an interesting signal that is worth paying attention to. Although the number of employees in real estate development and operation has dropped by 30%, the number of companies has basically not decreased, which means that developers have chosen to lay off a large number of employees rather than large-scale bankruptcy to cope with the downward cycle. If you are a related practitioner, you must have an idea in your mind and ring the alarm bell for yourself in advance.
Second, the insurance industry began to shrink sharply after completing a complete policy cycle. How serious is this contraction? Let me tell you some data. For every 100 unemployed people in the financial industry, 99 of them are from the insurance industry. In the past five years, there have been 5.78 million fewer people.
There are two reasons for the sharp contraction of the insurance industry: one is that too many people were recruited before. In 2015, the state cancelled the insurance sales qualification examination, and a large number of people poured into the insurance industry; the second is that the supervision has increased its rectification efforts. Starting in 2019, the central government required insurance companies to clean up the fake, inefficient and unprofessional agent team. Looking back, this also gives us a warning that if an industry suddenly expands on a large scale without any threshold, it may not be a good thing for you to invest in it at this time. Putting aside the industry’s internal circulation caused by rapid expansion, this disorderly expansion can easily make the industry the target of national rectification. If you enter the game impulsively, the result is that you may not only face the loss of wealth, but also be cannon fodder. This also shows once again that the impact of policies on industries, especially an industry that is facing rapid expansion, is crucial.
Let’s talk about the third industry that is facing contraction, the mining industry. Its contraction proves the helplessness of technological substitution. You may not pay attention to this industry at ordinary times, but the changes behind it are very helpful for trend thinking, which shows the important influence of technology as a variable.
The mining industry has also lost 1.28 million workers in the past five years, but this time it is not because of policy, but because of technology. Here I will talk about a set of seemingly abnormal data: in 5 years, although the mining industry lost 1.28 million workers, the output did not decrease but increased, for example, the national coal output increased by 38%. The fewer people, the higher the output, which shows that it is not the industry that is in recession, but the technological progress. Now the entire process of mining can almost be automated and intelligent, and workers are replaced by smarter machines. This is the “new industrialization” we have repeatedly mentioned before.
You see, this is not just a policy concept, but a huge change in industry and employment under the baton of policy, which is a reality that is happening. Moreover, today technology can achieve large-scale substitution in the mining industry. Will it achieve large-scale substitution in the service industry in the future? I will leave this question to you first, and you are welcome to discuss it with me in the comment section.
Under the dual pressure of industrial cycle and industrial transfer, the fourth accelerated contraction is labor-intensive manufacturing. The representative industries are the clothing, textile and shoemaking industries, which have reduced nearly 3 million people in the past five years. The contraction of such labor-intensive industries is due to the economic cycle and industrial transfer, but the downward cycle is the main reason.
Data show that the overall revenue of the clothing and textile industry has declined by 20%, while in contrast, the number of employees in the machinery manufacturing and equipment manufacturing industries is increasing, with revenues increasing by 67% and 38% respectively. Because revenue is declining, companies such as clothing and textiles can only move to countries with cheaper labor, further accelerating the decline in employment. Therefore, the term “industrial transfer” that we hear every day is not a cause, but a result. Before this industrial transfer, employment opportunities have gradually decreased.
But the impact of the result of industrial transfer is fatal. Because if the strong and weak cycles of the economic cycle cause companies to recruit fewer people, they can recover in the future, but if they recruit fewer people because of industrial transfer, they will not be able to come back in the future. Simply put, this industry has no way out in this place, so far.
The state is also clearly aware of this, so in the previous policy documents on “high-quality full employment”, it was clearly proposed to guide the orderly transfer of labor-intensive industries from the east to the central and western regions. What does it mean? The state is trying to allow these seemingly backward industries to play their residual heat in the west and solve the employment opportunities in the west. And this gives us a hint that if practitioners do not upgrade themselves, they can only follow the industry. If they can’t make it in the east, they can go to the west with the industry. Therefore, if you are the person in charge and decision-maker of the relevant industry, you must clearly realize that you either upgrade yourself or accept your fate. The most feared thing is that your industry has no way to go, and you have to find opportunities on the ruins.
The fifth and last industry facing contraction is the automobile manufacturing industry. This industry is currently struggling in the “involution”. Although it will not starve to death for the time being, it is extremely uncomfortable. The number of employees in the automobile manufacturing industry has basically not decreased, but the number of enterprises has decreased by nearly 41%. This shows that the industry is stable as a whole, but the “involution” has “rolled” all small and medium-sized enterprises to death, and industry resources are further concentrated on the head enterprises. You should know that starting from July 2024, the Central Political Bureau meeting and the Central Economic Work Conference have mentioned that it is necessary to prevent “involution” vicious competition. Now we can understand why the country is so anxious, because the actual situation may be much more serious.
So far, we have analyzed 5 industries with serious contraction. If your industry is among them, don’t be too anxious and discouraged. Now I will take you to further understand the deep reasons behind the current situation of these industries and help you “know why”.
I summarized the three main forces that affect industry contraction: first, technological substitution, such as the contraction of the mining industry mentioned above; second, economic cycle, such as the contraction of the construction industry; third, national policies, such as the contraction of the insurance industry. Of course, I just picked a few typical examples here, not necessarily your industry, so I suggest that after listening to this lecture, you should compare your industry and find out which are the key factors affecting your industry. You are also welcome to share and communicate with me in the comment area.
How to deal with possible industry contraction?
Finally, after finding the key factors, let’s talk about the question of “what to do”. Here I provide three directions of action.
First, seize every opportunity and stay away from industries where technological substitution is taking place, such as the mining industry mentioned above. Technological substitution is like switching from a horse-drawn carriage to a car. Once it starts, there is no way to go back. The only thing we can do is to continuously expand our circle of competence, which is also the reason why the country encourages “lifelong learning” – because in an era of great technological change, you can’t survive by relying on “old capital”. Giving up this idea as soon as possible can put you in an active position earlier.
At this time, you may want to ask, Mr. Ma, how do I know if I will be replaced? Let me tell you a little trick. You compare your own ability to make a living with the new functions of technology. If you are a blue-collar worker, compare it with “robots”; if you are a white-collar worker, compare it with “artificial intelligence”. For example, if your job is data analysis, but DeepSeek recently updated the data analysis capabilities of AI. Don’t think too much, this is coming for you, and what you can do is either make good use of AI or change industries as soon as possible.
Second, in the face of the trend changes in the economic cycle, we should pay attention to the rhythm. It is best to step on the right rhythm in advance, and do not try to fight against the downturn of the super-long cycle, such as the real estate industry. Specifically, economic cycles are divided into long and short. If your industry is generally upward, but there are only short-term fluctuations, you don’t have to give up immediately, but slowly find your second growth curve to ensure that you can survive until “tomorrow”. But if the long-term trend of your industry has been determined, then your best choice is to leave as early as possible before the industry collapses.
Third, national policies have a strong impact on many industries, so we must keep up with the latest changes and pay attention to the “temperature” of policies. Understanding policies is equivalent to choosing suitable clothes according to the temperature of different seasons. If the government suddenly reduces taxes and subsidies for a certain industry, it means that the industry’s “spring has come”, and the scale of employment will also expand appropriately; and once the country clearly strengthens supervision of a certain industry, it may be “wintering”, at least the peak of development is over, and a wave of layoffs may also come. Therefore, I suggest that you pay more attention to policy documents and the statements of important leaders. This is what I have been saying repeatedly. The purpose of studying policies is not to be a topic of conversation, but to guide personal decision-making. We must always find ways to use the policy pot to cook our own dishes.
In general, the key to grasping industry trends is to find trends in technology substitution, economic cycles and national policies, and among these, the certainty and influence of national policies are the most direct. This is also the focus of our course that we will always pay attention to and interpret for you.
