Yang Huaiding obituary

In February 1988, Yang Huaiding, who has died aged 71 of diabetes, saw the opportunity that enabled him to give up being a warehouseman at a ferroalloys factory in Shanghai to become a retail investor – China’s first. Eventually his success led to him being popularly referred to as Yang Bai Wan (Yang Million).

His example served as an inspiration to ordinary Chinese people looking for ways to change their livelihoods after years of the communist planned economy. With his immediately recognisable buzzcut and endless insights into the city’s stock market in his awkward yet distinctive Shanghainese-accented Mandarin, Yang represented a rags-to-riches tale that paralleled the country’s transition from pure communism to semi-capitalism.

Having a secure “iron rice bowl” job at the factory brought him a salary of 41 yuan (at the time £4.60) a month. The prospect of improving on this struck Yang when he read a newspaper report that China was planning to partly open its government bond market. This would mean that investors could freely buy and sell bonds in Shanghai and six other cities participating in the experiment.

As soon as the market opened on the morning of 21 April 1988, Yang took all his savings and bought as many bonds as he could. A few hours later the bond price rose. He sold them all, at a profit of 800 yuan – equal to almost two years’ income from his job at the factory.

“Looking back, there was nothing sophisticated about Yang’s investment strategy,” said the Shanghai-based equity researcher Qian Qimin, who had known Yang since the 1990s. “But in the late 1980s, it was maverick thinking. After years of command economy, people in China had become used to the old ways of doing things.”

Through reading newspapers in a library, Yang discovered that bond prices differed in the seven cities involved in the scheme. The lower the tier the city belonged to, the cheaper the price was. So he began to shuttle between the cities and became China’s first private investor in the long-distance bulk trading of government bonds. His first pot of gold began to emerge, and with it came the million yuan tag.

But there was one problem for Yang. He was unsure whether his massive profit from cross-city transactions was legal. Back in the 1980s, “speculation and profiteering” was a crime still, and nor did he wish to be considered a tax dodger. So in 1989, Yang took the further unconventional step of walking into a tax office to seek clarification.

“One is not required to pay tax for earnings from trading government bonds,” the tax inspector told Yang. It was a huge relief to him, and a validation of his strategy. That short reply encouraged him and his followers, and the following year Yang entered China’s nascent stock market as a professional investor.

Stories about Yang captured the public imagination. In 1993, he successfully dodged a market crash. He was reported to be the first person in China to hire bodyguards, and the first in the country to hire private lawyers to sue a securities company.

Born in Zhenjiang in the east coast province of Jiangsu, to the north of Shanghai, Yang moved to the city with his parents – his father worked in a tax office, his mother was a social worker – after finishing primary education. The communists had taken power a few years earlier, and the country was mired in endless political campaigns. At that time, being a worker was more important than being educated. So shortly after the family settled in Shanghai, he began to work in a state-owned factory.

In the 1980s, Yang’s fortune began to slowly change. Mao Zedong’s cultural revolution receded with his passing in 1976. Deng Xiaoping returned to high office, and from around 1979 China’s experiment with decentralisation and capitalism began. Chinese people whose talents were squandered under Mao wanted to improve their lives, Beijing needed money to rebuild the economy, and so the issuing and trading of government bonds became a symbol of a country returning to normality.

Some compared Yang to the US investor Warren Buffett. But he dismissed Buffett’s investment theories as “not suitable for China’s unique situation”, and in any case the aura surrounding him faded away as China’s stock markets became the world’s second largest, now dominated by institutional investors.

Nonetheless, said Qian, he “encouraged many to join the world of investment, and showed China’s leaders that a capital market can work in China as it does in any other societies”.

His surviving family includes a son, Yang Yuqi.

Yang Huaiding, investor, born 1950; died 13 June 2021


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