The Financialization Rush: Responding to Precarious Labor and Social Security by Investing in the Chinese Stock Market

The South Atlantic Quarterly 114:1, January 2015

doi 10.1215/00382876-2831279 © 2015 Duke University Press

Giulia Dal Maso

The Financialization Rush: Responding to Precarious Labor and Social Security by Investing in the Chinese Stock Market

China has recently aligned itself with the current configuration of global capitalism. To make up for the delay, the country rushed, adopting a new pro-cess of financialization that, after an explosive jump, eroded the previous social economic order. As a result, China has erupted onto the scene of variegated capitalism. The emergence of China represents one of the most striking disruptions to “old spatial hierarchies” of capitalism (Mezzadra and Neilson 2013b: 9). While China seeks to gain a dominant position in the new global circuits of finance, it has like other countries been forced to confront new forms of accumulation that are increasingly intermingled with the exigencies of logistics and extraction (ibid.). In this context, the Chinese stock market has become a privileged and strategically important site within contemporary capitalism.

The impetus for this recent leap forward was provided by the Chinese state itself. In launching a new set of economic reforms at the end of the 1970s, the state called for a new quality of entre-preneurial population. In this article, I share the thesis that through the stock market “China is constructing capitalism anew” (Keith et al. 2014). I also argue that the state is the primary mobilizer

South Atlantic Quarterly

Published by Duke University Press

48 The South Atlantic Quarterly • January 2015

of a new Chinese economic life that leads to financialization. With this term I refer to a shift in the economy that has witnessed an increasing influence of financial intermediation—performed in China mainly by the state, by its policies and its agents—together with the increasing role of financial calcu-lations and assumptions spilling over into everyday life. This shift has wide-ranging social impacts. In the process of accommodating the entrance of global capital, the state pushed for a general restructuring of society. Fac-tors such as the reform of the labor system and the corresponding dissolu-tion of social guarantees produced a climate of deep and generalized dis-placement among the Chinese population. Notably, it was at this time of a deeply shaken political social and economic order that the state—in its quest for a leading position in the global financescape (Appadurai 1996)—opened up the stock market.

In addition to providing financial capabilities, the Chinese stock mar-ket was created by the state to cope with the displacement and disruptions of Chinese society. Thus the stock market is a bifunctional device: it not only offers a chance for further enrichment in the context of a shrinking welfare state and the increasing individualization of society; it also acquires the role of a social space where individual investors can regroup and function in an ersatz of community belonging. In this article, I provide an account of the current phase of Chinese mass financialization through an analysis of the disaggregated subjectivities left behind by the state-driven dismantling of the danwei (the socialized work units of the communist era). I focus particu-larly on the sanhu (literally “scattered investors”) and dahu (large “scattered investors” who usually invest more than ¥100,000). The term sanhu has a double meaning: on the one hand, it refers to all informal investors includ-ing those who make large investments; on the other hand, it refers exclu-sively to small informal investors in contrast to the dahu, the big informal investors. In this article, I use the term sanhu in the latter sense.

An approach to financialization in China through attention to the sub-jectivities generated is potentially one of the most revealing ways to depict its distinctiveness as a constitutive part of capitalism’s heterogeneity. An analy-sis of the subjectivities involved shows that Chinese financialization has been directly mobilized by the state as a governmental device, contrary to financialization elsewhere, which, despite the ongoing role of regulatory sys-tems, is often understood as a response to the gradual withdrawing of the state (Dore 2000; Martin 2002). Such distinctiveness is crucial to current efforts to rethink its particular postcrisis condition.

As the “current form of capitalistic command” (Negri 2010: 266), finan-cialization emerged in the form of an economic coercion that goes deep into



Dal Maso • The Financialization Rush 49

the entire system of social relations, from labor to everyday experiences. In China, it has acquired distinctive characteristics as it provides a substitute for the previous social order, which had been emptied out by fading social guarantees and devastated by the reforms that accompanied the country’s opening to the world. Through a process of financialization the Chinese state was able to strengthen the “myths of origin” of the contemporary Chi-nese regime; financialization acted as the ground upon which government slogans such as “To enrich is glorious,” “Richness is within range,” and “Dream a Chinese dream” were subsequently formulated. Since the opening of the stock exchanges in Shenzhen in 1990 and Shanghai in 1992, a wave of “stock fever” (gupiaore) has swept the population. State policy, by using rhet-oric that aims to imbue the population with a healthy desire of becoming rich through stock investments, has stirred up a craving for money. The con-cept of “fever” is a powerful device to address the population and should be understood as a distinctive quality of Chinese financialization.

This article provides a description of some of the distinctive features of Chinese financialization, drawing from ethnographic observation of places and subjectivities.1 I suggest that this process recalls those of “privatized Keynesianism” (Crouch 2009) and the privatization of welfare (Marazzi 2008) that provide a basis for what has been termed “mass financialization” in the West. In making this argument, I aim to show how the persistence of financialization (or lack thereof) is pervasive in modeling the contemporary operations of Chinese financial capitalism. In other words, I propose that during the transformation induced by the reforms the state adopted policies and other strategies of governance that have resulted in the financialization of everyday life. In so doing, the state has, in turn, curtailed its role as a social guarantor. The individual investors in the stock market have emerged as those who, pursuing their self-improvement in the framework of a legiti-mate social scheme, produce an alternative to the previous collective space. Understanding this emerging activity is crucial for asking why Chinese financialization, in its mass dimension and in contrast to the West, appears particularly significant in the aftermath of the financial crisis. At this junc-ture, the Chinese state, far from implementing any austerity policy, con-stantly pushes ahead its frantic financial agenda with no restrictions on expenses. China stands in contrast to the approach of pervasive financial austerity as a form of state legitimation.

Ultimately, I underline how the Chinese stock market has had two main functions since its establishment: launching China in a “premiere” posi-tion in the capitalist order, while maintaining a paternalistic role necessary to perpetuate a social order deeply shaken by economic reforms. These dual




functions are the epitome of the precarious equilibrium of Chinese finan-cialization: on the one hand, the state asks individuals to massively partici-pate in its policies; on the other hand, individuals, acting as an unorganized mass, question and jeopardize these same policies.

Framing the Picture

Contemporary capitalism is usually defined in terms of computerized algo-rithms, abstract financial products (such as futures and derivatives), and similar devices. The image of Wall Street as crowded by frenzied brokers is outdated and should be substituted by images of computer screens display-ing fragmented graphics and numbers. Worldwide there is an increasing lack of trust toward the cryptic machinery of financial markets. In particu-lar, the utopian power of financial booms that promise easy money to every-one is now questioned.

In China, however, this trust appears to have endured. There, invest-ing in the stock market is an everyday activity accessible to anyone possess-ing ¥5,000 (the equivalent of US$600). The experience of trust in financial markets is double-sided: it is a mix of expectation for opportunities and fear of risks. Mr. Feng, a dahu in Shanghai (and also an early investor with a long career), revealed this duality in an interview. He stated that people did not know what the effect of the stock exchange’s opening would be: “We were excited and scared at the same time.” His statement echoes Deng Xiaoping’s (1994) famous message from Shenzhen in 1992: “Are securities and the stock market good or bad? Do they entail any dangers? Are they peculiar to capitalism? Can socialism make use of them? We allow people to reserve their judgement, but we must try these things out.”

To accommodate the potential social risk resulting from the reforms, the stock market was conceived as an instrumentum regni (government device). Since opening, the Shanghai and Shenzhen stock markets have clearly displayed the nature of “tamed spaces.” In fact, China’s stock market acts in a space insulated from international financial capitalism. It was orga-nized in the form of two distinct markets for company shares: one for domes-tic investors and denominated in yuan (“A” shares) and one for foreigners, denominated in US dollars (“B” shares). While the latter aimed to attract indirect foreign investments, the former has always constituted a very dis-tinct market, operating according to purely domestic rules and adopting a different ideological approach. This division strategically placed the govern-ment in the position of creating a Chinese zona franca (free zone), where for-




eign investors could play a role in participating, observing, and exchanging information within the Chinese stock market; at the same time the govern-ment preserved an exclusive space for Chinese investors, in the form of domestic deposits.

The decision to start investment activities in response to an outmoded labor condition unites (at least to some extent) individual investors, whether small (sanhu) or large-scale (dahu). The stock market offered another way to partake in social life, which after the opening reforms was quickly redefined by the imposing and pressing rhythms of high growth in the urban spaces of Shanghai and Shenzhen. In particular, people who were unemployed, retired, or forced into early retirement (generally with low public pensions) found the grip of stock fever particularly strong, as it offered a new way to participate in public life. In China, the activity of investing can still be repre-sented effectively with the image of crowded trading rooms where people satisfy at the same time their needs both to socialize and to improve their incomes through investing.

Investing as a Substitute for an Occupation

Most of the brokerage branches I visited in both Shanghai and Shenzhen are organized similarly: sanhu of every age and every social background usually crowd the large, open trading rooms, which are equipped with several big screens displaying stock exchange figures. This setting is almost a public space: everyone chats loudly, some might smoke, others nap, and some women sit and knit while watching the trend of the stocks on the screen (Rooker 2008: 12). At the back are the private VIP rooms belonging to the dahu. The services provided are cutting-edge. Investors can access an elec-tronic trading platform, and efficient software offers “metrics such as indices, disclosure, real-time price dissemination, and corporate notices” (Walter and Howie 2012: 166). Furthermore, in the past few years, China has seen the dif-fusion of the latest, most updated financial software to small investors who even from the most remote parts of China can invest using their smart-phones. Thus all this equipment confers even on the unassuming sanhu an apparent sphere of “advanced” financial professionalism. More than 60 per-cent of the securities market (along with the trading companies producing this software) is owned by the state. The spread of this software appears, there-fore, to support the state’s efforts to encourage as many people as possible to adhere to the dream: “Despite the infrastructure, the data, and all the money raised, China’s stock markets are a triumph of form over substance” (166).




In the process of dismantling the danwei, all the traditional social para-chutes (such as state work allotments, fixed salaries, medical assistance, retirement funds, council houses, social security, and funeral fees) faded away. The attempt to provide a new space as a substitute for the dismantled danwei was very tortuous. The opening of the stock market served as a motor for the transformation of state-owned enterprises. The stock market was conceived to provide funds to the enterprises undergoing privatization and concomitantly to reactivate workers’ enthusiasm by allowing them to invest in their own enterprises.2

In this context, processes of financialization extracted the subjects pre-viously accommodated within this political fabric and transformed them into new subjects. In the brokerage rooms, the language of value—spoken by global capital and not by the danwei—became the predominant language. The violent imposition of this language, given that the preexisting popula-tion was unaware of it, had the potential to raise discontent. Consequently, the state introduced new social practices to act as a “clearinghouse” for indi-vidual and social resentments.

The foundations of the new financial market were thus laid in a new social era, and individuals looking for a new life, new forms of social guaran-tee, and further enrichment were particularly vulnerable. For the general population, investment in the stock market became a possible escape from the minimum wage and an increasingly untenable social welfare system. Suddenly, finance affected everyday life, and for Chinese citizens looking for fast money, it gained the power of “romance” (Jameson 1981). By evoking this visionary and utopian scenario, I want to suggest that financialization in China prefigured the framework of the “Chinese dream” (zhongguo meng): a crystallized formulation propagandistically created by the state in 2013 to deliver and sustain belief in a Chinese renaissance. This ideal was made pos-sible by the union of capitalistic satisfaction with a nationalistic revival of China’s past imperial splendor.

Distinctive Financialization: The West and China after the Crisis

Financialization was coined to indicate the pervasive tendency of contempo-rary global capital to blur the very distinction between the “real economy” and the “financial economy” (i.e., between “material expansion” and “financial expansion”). This concept is a central concern in the contemporary crisis of financial capital (Fumagalli and Mezzadra 2010: 10). However, a close exami-nation of financialization in China highlights its continuities and disconti-




nuities. To clarify the distinctiveness of Chinese iterations of financialization I first examine the multiple facets of financialization in the West, before con-trasting these with the particular Chinese logics of financialization.

In the West, the term financialization first came to attention in Marxist political economics in the mid-1980s (Magdoff and Sweezy 1987) to identify the general problem of the absorption of surplus and the consequent rise of monopolies. Emerging financial activities were seen as a way to substitute production activities that were no longer profitable (Arrighi 1994), or as a way to support them in a more integrated system with no further clear-cut distinction between production and financial sectors (Harvey 1999; Leyshon and Thrift 2007).3

The term was later used to refer to the general process wherein world financial institutions began to turn their financial assets over to households and everyday workers (Aglietta 1995; Lapavitsas 2011). This understanding of financialization has also been explored through a Foucauldian perspective on governmentality and the identification of a process of financial subjectifi-cation (Martin 2002; Marazzi 2008, 2011a; Lazzarato 2012). Finance, previ-ously circulating among an elite group that shared the same unreachable expertise, was gradually brought down to a popular level and insinuated into everyday practices.

In the introductory notes to Randy Martin’s Financialization of Daily Life (2002: 1), this change is described as “fun” entertainment: “Suddenly, finance is fun.” However, this positive outlook altered as the change culmi-nated in the financial crisis. Ordinary people went from being called on to master their own finances (including mortgages and educational loans) to having debts they were unable to pay. Christian Marazzi (2011b) identifies the crisis as arising from the transition from the economic order to the social and potentially political dimension, with resistance maturing during the phase leading up to the cycle. This crisis was unprecedented in generating popular distrust of financial markets, in terms of the accountability of their institutions and expertise. Tragically, financial markets failed to control the drift toward economic crisis and its consequent risk to the population. Beginning in 2008, protests developed (from Occupy Wall Street to Occupy Frankfurt), questioning the state’s role in controlling the financial markets and the policies produced by states within this scenario. As a major weekly newsmagazine, Der Spiegel, declared: “The protests drew widespread sup-port from politicians in Germany and Europe, who are currently wrestling with banks to increase the participation of private creditors in the debt bail-out currently being planned for [states like] Greece. The same politicians are




frustrated by their inability in recent years to push through tougher regula-tions for financial institutions” (Lindsey 2011).

This “frustration” within the political and financial spheres was also manifested in a reciprocal estrangement of these two spheres. For instance, the Guardian, quoting the English politician Clement Attlee, refers to the financial core, “the city” of London, in these terms: “Over and over again we have seen that there is in this country another power than that which has its seat at Westminster” (Monbiot 2011). The city is described by George Monbiot (2011) in the form of an offshore state, an autonomous state within En gland’s borders that is in the position of “launder[ing] the ill-gotten cash of oligarchs, kleptocrats, gangsters and drug barons.” The political claim of noninvolvement in the financial core triggered a shift of responsibilities over the crisis that opened up an “in-between” space to be filled by a new postcri-sis rhetoric. In this interstice it is possible to witness the complicity of these two complexes—recalling the collusion between the Cat and the Fox in Carlo Collodi’s Pinocchio—in maintaining the current order (i.e., in the form of state bailouts) and at the same time in experimenting with a new rhetoric of the postcrisis period.

Now, in the sixth year since the financial crisis of 2008, both states and financial institutions are embedded in a system that, shaken in its foun-dations, is being sustained through what Marazzi (2008, 2014) has defined as a financial turn toward the “linguistic performative.” Particularly in the postcrisis period, the powerful use of the word recovery has emerged in the form of a new weapon. Janet Yellen, the new head of the US Federal Reserve, has declared a strategy that pushes for “forward guidance” (Marazzi 2014). Mario Draghi, the head of the European Central Bank, offered a similar approach when he identified an aim to nurture future expectations for recov-ery through financial rhetoric (Marazzi 2014).

Thus, in concomitance with bland social investments, this communi-cative weapon acts as a strategy to sustain an unaltered financial postcrisis environment, while feigning an intervention and the rescue of the popula-tion. This strategy is in sharp contrast with what mass financialization and its materiality are demonstrating: an increasing impoverishment of people that exposes “the limits of financialization as a self-sustaining movement” (Mezzadra and Neilson 2013b: 9). Despite this evidence, ongoing financial postcrisis rhetoric is preventing governance from making any crucial deci-sions, while normalizing the postcrisis situation as indefinite (1).

In China, however, the situation is very different. In this country there is no manifest dichotomy between two different agents. Therefore, it is not possible to appeal to two separate entities by “passing the buck” between




them. The state is strongly preserving its monopolistic intervention and therefore is able to persuade the population to underestimate the gravity of the crisis. Furthermore, it is also able to modulate once more the leit-motif of “richness at hand” to muffle resentment from the population. The powerful weapon, in the case of China, has been a variatio rhetoric: “Getting rich is glorious” (during the 1980s); the “Three Represents” (advanced social productive forces, advanced culture, and the interests of the overwhelming majority) (during the 1990s); the “harmonious society” (in the early 2000s); and the current “Chinese dream.” China was also partially hit by the global financial crisis (with the stock market falling by 20 percent, individual inves-tors started losing and some even quit the stock market); however, stock fever didn’t disappear.

Although China was affected by the crisis, the state promptly inter-vened to maintain 8 percent growth and boosted the economy through an extensive economic stimulus package that was based on public finance and borrowing. The massive stimulus of ¥4 trillion (US$586 billion) worked as part of the official rhetoric that promised support for major industrial sec-tors and investment in infrastructural projects, consumer spending, educa-tion, and housing (Naughton 2009). However, in later practice it was clear how this package produced very socially and locally uneven effects (Sum 2011: 199). The largest fraction of this spending went into investments in state-owned enterprises and their capital assets (land development and infra-structure). The package was also organized to reinforce a previously consoli-dated economic model and political status quo, whereas the country could have better shifted these benefits toward services and domestic demand. The power of state-owned enterprises was evident when they used the crisis to suspend the new Labor Contract Law to defend their interest in the manu-facturing sector hit by the crisis (Hung 2009: 22).

In 2010 a wave of labor unrest and resistance, including strikes and collective suicides, swept through China’s Sunbelt in the most industrial-ized area of the country (Friedman 2012). Well-known foreign companies (such as Honda and Foxconn) were profiting from their foreign capital, tak-ing advantage of low Chinese labor costs and the lack of regulation. Protests in the countryside arose, and larger discontent from the migrant workers exploded in many parts of China. Instead of undertaking effective mea sures in response to the workers (Sum 2011: 199), the state chose the route of cul-tural hegemony, showing a “growing China,” with new shopping malls springing up almost overnight to promise an extensive choice of new Western leisure products. Since the economic reform, the ruling class has used this strategy to perform and retain power: “Using the back door to gain access to




official circles[,] it directly occupies the front stage of a political economical and spectacular power, directing mass desires and constructing the public imagination, numbing and postponing a social awareness of crisis” (Wang 2003: 604).

The stock market was thus one means of strengthening hegemony, and in this setting the sanhu occupied an interesting position. On the one hand, they could share the general discontent expressed in the protests given their own impoverished social condition; on the other hand, they still related to the stock market as an alternative space for gaining their individual revenge. The individual investors who did not give up investing during the crisis (both the Shanghai Stock Exchange and the Shenzhen Stock Exchange Composite Indexes suffered a 70 percent drop from their historical high during the period from October 2007 to October 2008) benefited after the stimulus from a market that started rising again because of state support for the main listed companies.

The state, through its continuing intervention—through both the reg-ulatory commission and financial injection—has seemed up to now always prompt to rescue the market. During the crisis, the state did not stop using financialization as a way to recall the powerful myth of positive change. In China, no distrust is overtly visible toward finance, neither as an offshore kleptocratic reign alternative to the state nor in the form of a separate entity the state had to rescue through the bailout. As a consequence, the above-mentioned financial subjectification in China remains one of fever, preserv-ing a strong mimetic power. Thus, in China, financialization survives by staving off the perception of its destructive and fraudulent aspects to the state. An undeniable distrust toward the state is widespread among the Chi-nese, but this distrust has not yet affected the process of financialization. On the contrary, this process is still winning the confidence of ordinary people, even if it has been fostered by a long-term set of state measures. Actually, the surveyed population primarily distrusted the perceived fraudulent manage-ment of the whole financial sphere by the state. An astonishing gap between the state and its creation (financialization) seems to exist in the minds of contemporary Chinese.

The State, the Dahu, and the Scattering Power of the Sanhu

During my conversations with financial regulators and analysts from securi-ties companies, the opinion emerged that the presence of the sanhu in the stock market is seldom welcome. The holders of what could be considered




formal financial knowledge, supposedly in line with that of the state, expressed a negative feeling toward the sanhu (the masses). I had the impres-sion they felt this way not just because the sanhu were considered to be a hindrance to the normal conduct of negotiations but also because their pres-ence was viewed as an abnormality in the global financial landscape, mak-ing the structure of the Chinese stock market appear backward. When I asked these regulators and analysts about the market’s general condition, they did not even want to mention the sanhu’s presence. Instead, they firmly repeated how China would soon have to take measures to increase investors’ access to fair information and knowledge of financial ethics, thereby implying that the process of corruption was dependent on the pres-ence of the sanhu. They told me that their hope for the development of a mature market was, sooner or later, to get rid of the sanhu. Thus it appears that the sanhu are considered a threat both by state officials and by their competitors, the dahu (large-scale individual investors). The sanhu are con-sidered to be the largest and most active community of individual investors in the world, amounting to 90 million people. According to the official sta-tistics registered by the Chinese Securities Regulatory Commission (CSRC 2014), in late 2013, 97 percent of the capital market was represented by the sanhu. Of this 97 percent, 85 percent of them were investing less than ¥100,000 (around US$16,000).

The dahu’s profile is ambiguous. Most dahu are long-standing inves-tors. They all come from the first generation of investors, and the way they access the market seems to be directly correlated with the position they held in the past; they could become rich because of their personal connections (friends, relatives, or acquaintances in the party). In some cases, they had access to classified information and could therefore act as insider traders. Their role is particularly evident within securities companies, where because employees provide service to clients and receive orders from the CSRC, they cannot play the stock market; the companies—60 percent of which remain controlled by the state—still receive regular information from the CSRC, which is also a state organ and provides updates on new regulations. Often a loyal client, a dahu, invests on their behalf, while taking advantage of the special information (insider trading) from the latest government updates.

The dahu are both despised and admired by the general population (Hertz 1998: 129). In a way, they have developed unique rules, professional-ism, and discipline. They follow a rigorous schedule and are certain of their role and authority within the market. Most of the dahu I interviewed described their daily activity as marked by a very disciplined schedule that involves




research, news updating, and deep insight into government legislation in order to perform their role and interact with their personal power connec-tions (guanxi).

In contrast to the sanhu, the dahu have attitudes that resemble what ethnographic studies in Western markets have described as typical trader and broker behaviors: an unquestionable attachment to and faith in the mar-ket and its authority (Appadurai 2012; Callon 1998; Marazzi 2008; Zaloom 2006, 2009). As Caitlin Zaloom (2008: 265) notes in her ethnography of the Chicago Stock Exchange: “The movements of the market represent financial truth. It is not surprising that traders’ attitude to the market takes on a quasi-religious aura. Discipline is, therefore, both a technique of the self and a technique of the sacred. Practicing discipline allows traders to attain a proper state to engage the overwhelming force of the market. Traders speak about the market in religious ways that make this analogy appropriate.” Dahu in Shanghai show the same attitudes toward the market and sustain the same discipline. Nevertheless, in China, this apparently solid behavior is actually triggered by faith in the party and not in the market. It is, in fact, through their respect for the status quo and their guanxi that the dahu gain sufficient authority to be successful in the market. Also, their personal, pri-vate, and detached private rooms in the brokerage branches attest that their status is well represented. They have to be authoritative and gain respect from the sanhu.

As others have demonstrated (Gamble 1997; Hertz 1998; Rooker 2008) and as was testified by my interviewees in Shanghai and Shenzhen, most Chinese individual investors are financial illiterates. They do not know how the stock market works, and they are incapable of obtaining or using any substantial financial news and reports. Without financial knowledge or substantial information, they would find it difficult not only to plan moves and build up a strategy but also to choose someone to follow or imitate, as suggested by the idea of herding behavior developed within behavioral finance. I suggest, instead, that in China investors are more likely to repro-duce what Marazzi (2008) has described as a “deficit of information,” based on a linguistic finance regime.

Lack of information also means a lack of preestablished order. The terms commonly used by investors when playing the market are revealing in this context. For example, chao (literally “stir fry”) refers to playing the mar-ket when it is in a “bull phase,” so it means playing and winning. Tao (being stuck) expresses the impossibility of reselling a stock after it falls (Rooker




2008: 13). These popular terms are used especially by sanhu, who play fast, instinctively, and with no long-term substantial information. The terms almost assume a value in and of themselves, so having any rational explana-tions with regard to their meaning becomes unnecessary. In general, the interviewees expressed that they were waiting for the market to enter a bull phase again so they could chao.

During the financial crisis, a significant number of individual investors closed their accounts (3.59 million); however, at the same time the number of new accounts opened by new investors rose from 2.92 million to 23.66 mil-lion between June 2007 and June 2012. Moreover, from 2009 to 2011, the number of accounts holding stocks worth less than ¥10,000 and between ¥10,000 (US$1,580) and ¥100,000 (US$15,800) grew, while the number of accounts holding stocks worth more than ¥100,000 (US$15,800) in market value declined; those holding more than ¥10 million (US$1.58 million) were the smallest in number (WantChinaTimes.com 2012). The dahu investors have been decreasing in number, while the sanhu have been growing. In this way, despite their subaltern position and the increasing awareness of their tendency to lose, the sanhu continue to be numerous. If many gave up during the crisis because of their losses, for many others the worsening economic conditions and the threat of job loss have worked again as an incentive to give the market a try, although most know how little chance they have of winning (statistics of the past few years in Shanghai show that 80 percent of the sanhu are unsuccessful in the market; WantChinaTimes.com 2012). When asked why they continued to invest, the sanhu invariably answered along these lines: “You know Chinese people, we all believe in being smarter than others.” In general, they were certainly open and waiting for a bull market.

The sanhu I met were generally uncertain, self-effacing, suspicious, troubled, and cynical. They were fully convinced of the government-party role and control of the market, connections, and insider trading. Sometimes they seemed scared, and other times I could glimpse that they were excited by the idea of experimenting with a new technique or a new secret exper-tise they could apply to the market. The sanhu are a multitude that remains power less, since they are unable to become a community of economic actors through the selection/election of a supraindividual convention in order to turn it into an “interpretative model” (Marazzi 2008: 36) valid for all players in the game of the market. This inability is due to the multiplicity of sources from which they gain their information. This multiplicity, which reflects their heterogeneity, has led them to develop techniques that often contradict




each other. Generally, I found it difficult to recognize a pattern since every-one was simultaneously using varied and multiple sources. While some of the older sanhu were following popular beliefs, younger sanhu were more likely to use financial manuals, blogs, and magazines that were written by laypeople. These gave advice on how to invest using popular “common sense.” To give an example, one of the financial manuals most in vogue when I was in Shanghai contained these suggestions: “You should always swim against the tide,” “It is never wrong to listen to your wife when buying stocks,” and “Pay attention to the potential when your stocks go up while paying atten-tion to the quality when they go down” (Hu 2009: 48; my translations). More-over, for many investors, including dahu, consulting the Tung Sing annual almanac was considered a good practice for finding out the good or bad days on which to invest. At the same time, they also followed the numerology beliefs of feng shui, according to which every number in Chinese has a mean-ing. This practice is based on the homophony of number pronunciation with Chinese words. The number eight, for instance, is homophonous (in Canton-ese pronunciation) with the Chinese word meaning “wealth”; the number four is homophonous with the word for “death,” so it represents very bad luck. The combination of the numbers could also give shape to entire sen-tences with different meanings; 158, for instance, means “I want richness” (Arduino 2008: 66).

This complex skein of beliefs and information gives an idea of the cha-otic environment and unpredictable behaviors that drive the sphere of the sanhu. On the one hand, it represents the strength of the sanhu, as an irratio-nal and ungovernable and disturbing mass, which the state cannot tame. On the other hand, it also represents their weakness, as they seem incapable of taking a united position. Although one motive for investment is sharing space and time with others, when it comes to money and earning, everyone goes into business for him- or herself and is very cautious to avoid sharing important secrets with potential competitors.

Conclusion

The financescape occupied by the sanhu appears to be an open plight, in which many contrasting trends clash and interact: the individuals’ fervent desires for further enrichment, their need to be part of a social space, and the impression that they are contributing to building the Chinese nation (a con-tribution at the same time extolled and feared by the state). The Chinese state has—up to now—successfully been using this situation to its own advantage.




However, the Pandora’s box of financialization represents a significant threat to the state and could lead to more strenuous conflicts between state repre-sentatives and small investors.

The current condition of financialization in China is particularly rele-vant to exploring postcrisis attitudes. While other countries experience an increasing rush toward financialization as a reaction to the state withdraw-ing from the social sphere, in China those who participate in the financial-ization rush consider the state a guarantor; at the same time the subjectivi-ties it produces in the population involve uncontrolled behavior, difficult questions, and threats to the state itself. Moreover, the performance of state authority is at risk because of its appeal to increasingly insubstantial and evanescent elements. Whereas Deng’s comforting rhetoric of “richness at hand” offered tangible outcomes, subsequent approaches were character-ized by intangible qualities: “harmony” in Wen Jiabao’s era and “dream” in Xi Jinping’s era. In the previous three decades, the leakage of political and economic content has led toward an increasing vacuum. The process of emp-tying out political meanings that has defined the post-Mao era onward seems to have reached an impasse, presumably due to the impossibility of for-mulating any substantial assurances to the people given the uncertainty of financial capital in a constant crisis. So what could come after this “dream”? Nothing but delirium, marasmus, or inebriation—all terms that offer no handhold for political utilization.

Notes

1 This article operates alongside the findings of a six-month fieldwork project con-ducted in 2013 in both Shanghai and Shenzhen for my PhD thesis at the University of Western Sydney, for which I conducted a set of interviews with Chinese investors and an analysis of the financial literature.

2 The introduction of the shareholding system was an attempt to reform more than one hundred thousand state enterprises, more than one-third of which were operat-ing without any consideration for the dynamic revenues/expenses under the planned economy. At that time, the shareholding reform of state-owned and collective enter-prises was an expansion of the earlier responsibility system that had been introduced in 1978 in the rural economy and that was already operating very successfully (Mok and Yao 1993).

3 For a further analysis of the rise of finance and financialization, see Krippner 2011: 4.

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Documents

The Financialization Rush: Responding to Precarious Labor and Social Security by Investing in the Chinese Stock Market