China's visa uproar is part of a DeepSeek illusion

You might have thought Beijing’s effort to attract global STEM talent would fire up legions of patriotic keyboard warriors eager to celebrate America’s relative decline. Instead, the launch of a new work visa has sparked an online furor that highlights the soft underbelly of China’s much-vaunted industrial policy.

The decade-long Made in China campaign to ensure the country can compete with the best of the West in 10 key industries — including robotics, electric vehicles and pharmaceuticals — has been largely successful. The technical prowess, exemplified by January’s DeepSeek moment, has fired up the stock market. But it’s not been enough to fill the gap left by the collapse of the property sector, which once accounted for as much as 32% of the economy.

Consumer pessimism was on display last week when the country wrapped up an eight-day holiday break. Fresh data suggest travelers were pinching their pennies. Spending was subdued, road trips replaced flights and box-office sales missed expectations, according to Bloomberg News.

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Against this backdrop, it wasn’t an ideal time to debut the K visa — what some have called China's equivalent of the H-1B. For now, details are still scant, though it comes as part of Beijing’s post-pandemic moves to loosen restrictions on dozens of countries to revitalize travel and consumption.

Announced in August, the new category drew little attention until President Donald Trump introduced a $100,000 fee on the highly coveted H-1B, which has brought millions of ambitious foreign workers, especially from India, to the US since 1990. Following the announcement, Indian media began to speculate on whether China’s ascendant tech firms might offer an alternative pathway if the US effectively closes its doors.

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Some of the resulting backlash on Chinese social media has been downright xenophobic and even racist. But much of the discourse has been more constructive, serving to reinforce what my colleague Karishma Vaswani calls Asia’s staggering jobs crisis that is disproportionately affecting Gen Z.

In China, the problem is particularly acute because of the sheer size of the deflated real estate sector. For years, property firms followed a simple blueprint: sell homes before they were finished. This model, introduced in 1990s, was able to keep up with surging demand as the country urbanized.

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The revenue funded the industry’s breakneck expansion. That method worked until about five years ago when the government cracked down on excessive borrowing, eventually triggering the downturn.

In 2021, when mega developer China Evergrande Group defaulted on its debt, the industry’s proportion of economic activity was almost double the 18% recorded in the US at its height. Because property assets make up about 70% of family wealth in China, the impact on spending has been so large that it has been impossible to substitute with growth in other areas.

China’s tech and consumer giants have had a disruptive influence on overseas markets. At home, though, their expansion hasn’t translated into rising tides for everyone. In fact, the tech sector now makes more headlines for cutting positions, especially people over 35 years old, than hiring.

In a speech last month, Yao Yang, a professor at the Shanghai University of Finance and Economics, said that despite its travails, real estate remains the country’s largest and most important sector. Bailing it out will require the central government to set up a national team to buy foreclosed homes, estimated at one million this year, as part of a push to stabilize the market, he added. Most experts agree that a slow and painful adjustment, which is just getting started, will take years.

In the meantime, Beijing’s Big Tech does have a responsibility to do more to protect its workforce, as I’ve written before, though it will struggle to add headcount in the way real estate had done. Bloomberg Economics estimates that tech’s collective contribution to gross domestic product is slowly but surely climbing as the economy looks for new growth drivers.

By 2026, the tech industry — defined broadly as including research, medicine, and advanced equipment — is expected to grow to 27 trillion yuan ($3.8 trillion), or just over 18% of GDP. At that level, it is still several percentage points short of property’s contribution during its peak 2015-to-2018 years and much less impactful in terms of job creation.

DeepSeek’s surprise emergence has done a lot for China tech. It has kicked off an equities rally, turned the tide on the tech war with the US, and even conferred an aura of cool on the whole sector. But the industry is struggling to pull its weight on employment. No wonder China’s young job seekers are so upset. The K visa was introduced at the worst possible time. Its days may be numbered.