China’s Silicon Valley Is Finished! Shops Shut, Home Prices Plunge, Internet Elites Hit Rock Bottom

Just look at how bad the economy is and how hard it is to run a business. This is Xihu in time. Look at these empty stores. This place used to be packed at night. Now just one restaurant is hanging on and everything else is for rent. The hotel closed too. Look down this street. That sign says the landlord is renting directly. There is another empty store next door. This is Xihu In Time, right beside West Lake. Guys, I just don't understand Maybe I should open a 100,000 square foot grilled wheat gluten restaurant here. That would be a way to lose every last penny. China's well-known consumer watchdog blogger Xinjifei lamented the store closures around Hangzhou's West Lake on November 5th. The Hubin Lakeside District and the Yan'an Road shopping area once offered some of the city's most valuable retail locations. Xihu In Time, a major commercial landmark in central Hangzhou, used to draw crowds every evening. Now, signs announcing closures and available storefronts are everywhere. It's Hangzhou West Lake, near Hubin, Wansha Road, Yan'an Road. I'm beside West Lake in Hangzhou near Hubin in Yan'an Road, and I've noticed something that really surprises me. It's around 9 in the morning. This should be a busy area, yet there are empty street front stores, more than just one. It's strange. A few years ago, an empty store in this part of Hubin would have been unthinkable. You could barely find the space available, especially in such a prime storefront location. This is the most miserable McDonald's in Hangzhou. This has to be the most struggling McDonald's beside Westlake in Hangzhou. Here's the Yuefei Temple, and Westlake is right across from it. I always thought business here would be really good, but this place closes at 7pm. Then I went to KFC next door. There wasn't a single customer. Really, not one customer. Just two employees. I ordered two iced Americanos, but the woman working there told me she didn't know how to make them. I had to wait for the young man who had gone to pick something up. It's so bleak. Just so bleak. Only that woman was there. I bought a bottle of coke and waited for him to return. Goodbye to this KFC that closes at 9 pm. This KFC beside West Lake has been open for more than 30 years. It was the second KFC location in Zhejiang province and has weathered many business cycles. Now, even during peak tourist season, it struggles to draw customers. Let me show you some stores in Xihu District, Hangzhou. Let me show you how many stores are still surviving in this mall in Hangzhou's Xihu district. This whole row has closed, including over here. All closed. Everything on this side is closed too. They've all shut down. It's hard to believe. This entire floor is closed. Store closures around the West Lake tourist area are striking enough, but Hangzhou's established shopping streets and major malls show an even broader collapse, with entire stretches of businesses shutting down. Hangzhou Wulin Road. This is Wulin Road in Hangzhou. So many stores here are empty now, I don't understand what's happening. Whether the economy is this bad or shopping districts are shifting too quickly, this used to be called Hangzhou's Woman's Street. There were so many clothing and jewellery stores. This mall used to be an old landmark in the west of Hangzhou. This mall used to be a long-time landmark in western Hangzhou. Now this fast food restaurant is the only business still open on the entire second floor. More than 10 years ago, this place was packed. You had to wait a really really long time to eat at Xin Bai Lu, which we just passed, or that fish restaurant up ahead. But look at it now, the whole mall is so quiet. All the stores have closed, leaving large stretches of empty retail space. It feels completely run down. Wow, I can see that all the shops on this side of Guangqilu are closed. Wow, I'm looking at this row of stores in Fengqi Road, and they're all closed. I don't know what happened. There used to be a few maternity and baby stores here. Now it's really bleak. One dollar, one dollar. It's over. It's over. Almost everything has shut down. Well over half the spaces are empty. Nearly everything is gone. Follow my camera and look ahead. Even the chain stores can't hold on anymore. A few businesses are scattered around here, barely hanging on. Running a physical store is so hard. This entire row has closed. The kitchen business... China Construction Bank, the Sign Shop, the Optical Store, the Dental Hospital. This year, Hangzhou has been the most closed city in the history of China. Hangzhou has had more business closures this year than ever before, even more than during a pandemic. Look, closed, closed, closed. I can't even find somewhere to eat. The restaurant industry has taken the first and heaviest hit in this wave of physical store closures, with more shutdowns than any other sector. Hello, hi everyone. I'm the restaurant owner who lost 6 million yuan running a business in Hangzhou's Binjiang district for two years. Yesterday, the 31st, our restaurant closed. It went out of business. Our Hangzhou location officially shut down at the end of the month. More than 6 million yuan, 24 months, over 700 days. I'm not afraid of being laughed at for saying this. We truly couldn't keep going. Those millions bought us a lesson and forced us to face reality. I'm probably the worst-off person born in the 1990s in all of Hangzhou. I lost 4 million yuan in one restaurant venture and became a joke to other people. Actually, 70% of the restaurants on the streets of Hangzhou have already gone out of business. Actually, 70% of the restaurants lining Hangzhou's streets are already out of business. They just haven't closed their doors yet. A restaurant can fail incredibly quickly here. This one only got its business license on July 17th. Less than three months have passed. It actually operated for just one month, then spent two months looking for someone to take it over. Hangzhou now has shops all over the street, 85% of which are losing money. Right now, 85% of the stores across Hangzhou are losing money, 10% are breaking even, and only 5% are making a profit. If you don't believe it, go look into it yourself. This year, physical stores basically don't have a separate person for each job anymore. One person does two people's work. Women are expected to do the heavy work of men. Men are worked like animals and owners have to be superheroes. High rents, persistently high labor and utility costs, and a sharp drop in consumers' willingness to spend have squeezed businesses, competing for the customers left in a market that is no longer growing. They have turned to ruinous price wars and even larger subsidies. The result is an industry mired in losses. The failures extend beyond inexperienced small and mid-sized entrepreneurs. Long-established businesses and well-known chains have also been hit. In fine dining, Mr. Dong, a premium sea urchin dumpling brand that once operated seven company-owned locations and had a presence in Hangzhou Tower, one of the city's top malls. began closing stores in 2023. All its locations have now shut down. Its parent company faces numerous lawsuits and its founder is under court restrictions on high-end spending. Bakery chains have also collapsed almost overnight. One well-known cake brand suddenly closed all of its more than 60 Hangzhou locations. Long-time establishments such as Xinhua Zhongcheng and Laodong Zhouhuang, familiar to generations of residents, have also taken down their signs and left the market. Physical businesses face more than plunging revenue. They also face pressure from local government inspections, fines, and arbitrary enforcement. Hangzhou's brick-and-mortar economy is entering a vicious cycle amid this unprecedented wave of businesses giving up their leases. Hangzhou was once a relatively relaxed, second-tier city known for Westlake. Its tea and silk traditions and private manufacturing that changed after Jack Ma founded Alibaba in 1999 In September 2014, Alibaba raised $25 billion in its US listing, setting a record for the world's largest IPO. This scenic city in the Yangtze River Delta was thrust to the forefront of a new era. NetEase, Hikvision, and countless tech startups established themselves there. Then live stream shopping took off, drawing leading hosts such as Via and LoYangHo. Along with multi-channel networks that manage online creators, Hangzhou gained titles such as China's Silicon Valley, the country's leading digital economy city, and the capital of livestream e-commerce. During that booming decade, Hangzhou experienced an unprecedented wave of wealth creation. Its GDP surged from 780 billion yuan in 2012 to 1.8 trillion yuan in 2021, Approaching Guangzhou, a commercial center for more than a century. The number of skilled young people under 35 moving into the city jumped from 212,000 in 2019 to 483,000 in 2021. Hangzhou ranked first nationwide in net talent inflows for five consecutive years. Hundreds of thousands of graduates from leading universities embraced the clear path to the middle class, accepting the idea that working 9 a.m. to 9 p.m. six days a week This week was a blessing. Join a major tech company, earn stock options, and buy a home. But that success story came to an abrupt halt in 2020. Early on November 3rd, 2020, authorities suddenly suspended Ant Group's planned listing, set to be the world's largest IPO just before its debut. A succession of politically driven regulatory crackdowns followed. Authorities repeatedly deployed antitrust investigations, data compliance reviews, measures to prevent the unchecked expansion of capital, and controls on algorithms. Alibaba received a record antitrust fine of 18.2 billion yuan in 2021. Its market value fell more than 70% from a peak above 800 billion US dollars. Livestream commerce suffered a severe blow as well. was fined 1.34 billion yuan over suspected tax evasion and banned across online platforms. Her once-powerful livestream business collapsed almost immediately. Other leading livestream networks faced strict restricting, while influencer agencies scaled back and fell silent. At the institutional level, these crackdowns reflected unprecedented government intervention. In the eyes of Chinese Communist Party authorities, Livestreamers with tens of millions of followers and control over tens of billions of yuan in cash flow, along with platform giants holding vast underlying data sets, were no longer simply sources of economic vitality. They were potential political risks, able to mobilize large audiences and send financial shocks beyond their own businesses. When authorities hit the brakes, the shock quickly spread through the entire industry chain. Alibaba's once-bustling headquarters campus is now quieter than ever. I've been here at Alibaba for two days. There are three campuses at Xixi, and we're at Campus B. It's so quiet here. There's none of that lively atmosphere, none of the youthful energy you associate with people in IT and the internet industry. The campus feels empty, bleak, and sad. The whole place just feels weighed down by gloom. I asked a friend in Hangzhou, and he said Alibaba has been steadily supplying society with talented workers, meaning layoffs. People leave, but no one comes in. He said Alibaba has practically became a commercial property operation. It has about 108 million square feet of commercial space and office buildings across the country. It can't possibly use all of it, maybe a third at most. More than half is rented out. So this campus is empty with barely anyone around. I came here in 2019 and took some Alibaba employees out to dinner. Back then. The entertainment business around the headquarters was thriving. Within about two miles of the campus, there were businesses catering to clients, business dinners, and karaoke entertainment. The campus was bustling inside and out. My point is that businesses built around online traffic, hot topics, and the latest trends eventually have their day come to an end. With internet platforms under tight controls and live stream commerce losing momentum, Hangzhou's two proudest engines of wealth creation stalled at the same time. Millions of young people who had moved to Hangzhou and joined its digital economy bore the direct impact. Major tech companies trying to survive shrinking profits launched layoffs under the banner of cutting costs and improving efficiency. Small and mid-sized companies closed in large numbers. Tech specialists and e-commerce workers who once saw themselves as the best and brightest We're suddenly thrust into a fiercely competitive job market. In Hangzhou's job market, ever-higher hiring requirements and pay packages cut nearly in half have become common. Job seekers no longer count on high salaries or two days off a week. Even jobs that offer basic social insurance attract fierce competition from dozens or hundreds of applicants. Do you know which city is the most difficult to find a job in the country? Hangzhou is the hardest city in the country to find a job. It's not just recent college graduates who struggle, experienced workers struggle too. Plenty of people spend months sitting in their rented rooms without work. You might be considered a genius in your hometown, but Hangzhou is full of people like that. Employers really can't find that level of talent here. Even those kinds of people have to line up for interviews. If you get hired, you really are the best of the best. It's really hard to find a job in Hanoi right now. Finding a job in Hangzhou is so hard right now. I worked in e-commerce for five years and recently lost my job. Then I interviewed for a position running a Douyin store. The competition here is unbelievable. I was interviewing to manage a store, but they wanted me to plan and direct short videos, run paid advertising campaigns, Write scripts and write sales pitches for livestream hosts. One person doing an entire department work for 6,000 yuan a month. And that isn't even guaranteed pay. It's split into 3,000 yuan guaranteed, 1,000 in performance pay, 1,000 as a position allowance, and another 1,000 in base pay tied to meeting targets. When I went for the interview, the office was packed. About 100 people had come, all competing for that job. Before I came to Hangzhou, I had such high hopes for it. I wanted a job with two days off a week. But after sending out enough resumes, I realized those jobs weren't there. Then I looked for one day off a week, or alternating five-day and six-day work weeks. My last job ended up giving me only two days off a month. Well, now, even that job has let me go. So I'm looking again. Finding work is so hard. Have you heard? The number of unemployed people in Hangzhou has passed one million. That means roughly one in three people is out of work. Ride-hailing drivers and food delivery workers are fighting over jobs. The competition is frighteningly intense. Major tech companies are cutting salaries and jobs. Recent graduates struggle to land even positions paying 4,000 to 5,000 yuan a month. Six-day work weeks and schedules alternating between five and six days are widespread. Two days off every week have become a distant hope in Hangzhou. The stalled job market has shattered income expectations and put intense financial pressure on once-rising tech workers who borrowed heavily to buy a peak price. During the nationwide property speculation frenzy, young people mistook temporary high-tech salaries for lasting security. They emptied their parents' savings, took on millions of yuan in debt, And rushed to buy homes in popular areas such as future Scitech City. But over the past three years, resale home prices across Hangzhou's most popular districts have fallen sharply, in some cases by half. Countless ordinary families who bought near the peak have been pushed into desperate financial situations. I can't believe how far Hangzhou home prices have fallen. I checked this morning and nearly passed out. I bought my place around 2019 or 2020 in a development called Zhongnan Chunxixi in Shanchang District. I think I paid around 3.4 million yuan. I put in the first million yuan I'd earned through hard work. After working so hard in Hangzhou for so long, I wanted to settle down here. This morning, I saw in our homeowners chat group that an apartment with the same layout sold for just over 2.4 million yuan. In just a few years, It's lost around a million yuan. Even more than that, without counting my interest in other costs, I just don't understand whether prices have fallen this badly across Hangzhou or only in my development. I'd like to know whether other people's developments have fallen too. I'm really planning to just lie flat at work. I'm seriously thinking about stopping my mortgage payments and giving up. I've carried this apartment in Hangzhou for five years and I really can't keep going much longer. I bought it in October 2019 for 2.74 million yuan. I emptied all our savings and borrowed some more to put down 840,000 yuan. I financed the remaining 1.9 million yuan with a 30-year mortgage. Five years have gone by, and I've struggled through all of them. Mortgage rates in Hangzhou were high back then. My first monthly payment was more than 12,000 yuan. Rates have come down a little over the years, but I still pay just over 8,000 yuan a month. Over five full years, I've paid 500,000 to 600,000 yuan. Recently, I printed out my complete payment history. Reading it left me completely crushed. After all that money, I've reduced the principal by only a little over 160,000 yuan. More than 400,000 yuan went to interest, straight to the bank. My original 840,000 yuan down payment is completely tied up, and hundreds of thousands more in interest have gone down the drain. Now look at Hangzhou's resale market. An identical apartment in my development can sell for only 1.8 million yuan. That's a loss of 940,000 yuan on the purchase price alone. Even if I swallowed the loss and sold now, the 1.8 million could barely cover the remaining bank loan. The down payment, five years of mortgage interest and the renovation costs would all be gone. Every penny. Large mortgages have squeezed out consumer spending while plunging incomes have exhausted household financial cushions. A generation that once saw itself as the new tech elite has found itself treated as expendable in the city's drive to raise revenue from land. Commentator Wen Zhao describes these people as financial tenant farmers. Medieval tenant farmers paid landlords for the right to work the land. Their modern financial counterparts take out large 30-year mortgages at the peak of their earning power, effectively buying the right to live in a home from state-owned banks at the expense of their youth and health. Once stock options lose their promise, year-end bonuses disappear, salaries are halved, or layoffs strike. Monthly payments of 20,000 to 30,000 yuan can become overwhelming. What was supposed to be a quality asset protecting against inflation turns into a burden capable of crushing a family. The slide in property values has also swept through the rental market. As large numbers of migrant workers and young tech employees leave Hangzhou, local landlords who once had no trouble finding tenants have been forced to lower rents to survive. In several large residential communities in eastern Hangzhou, fully equipped three-bedroom apartments once rented for 4,500 to 5,000 yuan a month, even after cuts to just over 4,000 yuan, they draw little interest. Outside many developments, landlords can now be seen holding cardboard signs and braving wind and rain to find tenants on the street, a once rare sight. Office market figures further illustrate the broad retreat. In 2023, Office vacancy in Hangzhou's central business districts climbed to 24.9%, leaving roughly one in four premium offices empty. Rents fell nearly 10%. For the first time on record, the market posted negative annual net absorption, meaning more office space was vacant than newly occupied. Meanwhile, the population growth that once gave Hangzhou a steady supply of energy is slowing rapidly. Official figures show that the annual net increase in permanent residents fell from 239,000 in 2021 to 172,000 in in 2022. And 146,000 in 2023. By 2024, it had shrunk to just 102,000, less than half the increase three years earlier. The changing age profile is another concern. By the end of 2023, people age 60 and older accounted for 22.5% of Hangzhou's population. Putting the city in the category of a deeply aging society. Meanwhile, the city reported a net loss of more than 140,000 people aged 18 to 34 over three years. That group is a key source of tech innovation and e-commerce spending. Population figures for Zhejiang province as a whole also show warning signs. In 2023, the province recorded 358,000 births and 437,000 deaths. Its natural population growth rate turned negative for the first time at minus 1.18 per 1,000 people. It was the first natural population decline in Zhejiang's modern history. When a city's expansion depends entirely on a steady inflow of skilled newcomers, its prospects weaken as the opportunities drawing them disappear. In Hangzhou, government crackdowns and an economic downturn have eroded high-paying jobs and the promise of building wealth. The city once called China's Silicon Valley now faces a harsh retreat from its earlier prosperity. Hangzhou's fall is more than an isolated failure of city management or a routine change in an industry's business cycle. It reflects the limits of the growth model that sustained China's economy over the past two decades. Heavy borrowing, reliance on land revenue, an oversized role for finance, and authoritarian administrative control. That model has reached the end of its course. Hangzhou's rapid decline points to a stark lesson. Without fundamental protection for private property, an independent and fair legal system, and meaningful limits on government interference in markets, prosperity built on land speculation, speculative bets on algorithms, and excessive debt remains deeply fragile. Young people drained the savings of both parents, their parents and their grandparents, the so-called six wallets. They believed working 9am to 9pm 6 days a week was a ladder to success. They thought they had secured a permanent place in the middle class. Instead, in the eyes of the system, they became the last group of financial tenant farmers to be drained of their resources in the vast gamble on land and finance. Hangzhou is already feeling the pain and this difficult chapter is only beginning.