Last May, Forbes magazine published a lengthy story about sea turtles. Not the yellow, greenish ones that have been around for thousands of years and can be found swimming in warm and temperate waters throughout the world.
The sea turtles referred to in the article are not reptiles. They are Chinese returnees.
More than 2.6 million Chinese students left their homeland since 1978 and have gone abroad to study mostly in America’s elite universities and colleges. In 2014 alone, there were 400,000 students studying abroad and half of them were in North American institutions.
Back in 2008, at the height of the financial crisis in the U.S…. Thousands moved their families back to China giving up high-paying jobs because they wanted to contribute to their country.
The Forbes article went on to say that according to a report put out by China’s Ministry of Education about half of these students return to their Chinese cities and villages where they make major positive changes to the country and to its people.
These Haiku, the Chinese term for sea turtle, are described as well-educated, young adults that hold degrees from foreign universities, often in the sciences or finance, and they are considered the brains needed by the world’s second largest economy to power its continued growth.
And indeed, many of these haikus are sought after for their advanced insights and world experience and they find jobs in the Internet sector or with multinational corporations.
2008 Financial Crisis
Back in 2008, at the height of the financial crisis in the U.S., many of these sea turtles were snatched from Wall Street and lured back to China to help reform its own stock markets. China’s Securities Regulatory Commission (CSRC) appealed to them to make “sacrifices for the motherland” and they were promised the best the government could offer. Thousands moved their families back to China giving up high-paying jobs because they wanted to contribute to their country.
Fast forward several years and we find a totally different accounting of how these returnees see their lives. Times have changed and when the CSRC turned this past summer to the remaining sea turtles in the States to help China emerge from a widening financial crisis, there were few takers this time around.
According to their own personal accounts, what had happened to the original sea turtles over the years was degrading and depressing. They were paid a fraction of what could have earned working in the private sector and they felt unappreciated by the CSRC for their efforts. No promotions were offered and eventually, some of these returnees were even forced out the very jobs for which they had given up their better lives.
And now, when experienced domestic and international financial advisors are needed the most in China, the rate of resignations by fund managers and administrators of financial institutions and programs throughout the country has shone a substantial increase over the last twelve months, leaving the Chinese markets in the hands of inexperienced advisors who don’t fully understand them.
List of Failures
Some analysts believe that the current Chinese crisis is a result of a litany of “misguided, counterproductive policies such as the crackdown on derivatives and malicious short-selling” that they believe brought on the recent sell-off.
"They don't have the same level of expertise as they did in recent years," said a senior Chinese derivatives trader at a foreign bank in Hong Kong.
They point to several factors that could most definitely have accelerated an already volatile economic situation.
According to one official who continues to work at the CSRC, the regulators refused to pay head to the possible consequences of increased margin financing that was being used for stock speculation and that was destabilizing the markets.
Additional criticism was lobbed at the CSRC for its defective reform of the IPO market which was reintroduced in early 2014 after a year’s suspension. The reform included new price guidelines that made Chinese IPO’s so easy to set up that they drew funds from the wider market. These IPOs were seen as a partial cause of this summer’s crash and led the CSRC to suspend them once again, this time indefinitely.
As a result of these moves, Beijing had to drop 900 billion yuan (($140 billion) into the stock market but indices continued their fall, virtually wiping out $4.5 trillion in market value, all the year’s gains to date.
CSRC mistakes and miss-directions have lowered investor credibility and the overextended intervention by the government has hurt China’s genuine concern for public commitment to economic reform.
Many of the former sea turtles have already left China to other parts of the world, siting their frustration over lack of policy influence as the main reason. Some were fed up with the limited opportunities for promotion and salary cuts for senior staff. Others couldn’t continue working where resentment from colleagues seemed to make conditions unbearable.
So it is not surprising that these returnees choose to leave their homeland once again and that those still on Wall Street refuse to fold up their lives and make the move back to China.
Sea turtles in the wild are known to return to the same nesting grounds at which they were born. It will take more than nesting for Chinese haiku to follow this natural instinct and find their way back home.