Sunday, February 1, 2009

Economic Unrest in China Is Much More Common Than Reported

Listening to the Wind by Ma Lin (1127-1279), Southern Song Dynasty

Because news in China is so closely controlled by the government, it is worth paying attention to stories from unmanaged sources. The Sunday Times just published an report on research that it had sponsored on the impact of the worldwide financial crisis on the export-oriented provinces of Guangdong, Zhejiang and Jiangsu.

Violent unrest rocks China as crisis hits confirmed what most outside China already believed -- that bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, and there have been "dozens of protests that are never mentioned by the state media".

The article provided examples of recent strikes, protests and violence, as well as examples of foreign-owned businesses that have closed and left behind unemployed workers and often unpaid debts. Here are only few of the examples:
  • When unpaid workers demonstrated in one town, officials were so concerned that they ordered the factory owner to pay the wages and sent armed police to accompany the withdrawal from the bank.
  • There were "pitched battles" between striking textile workers and security guards in the city of Dongguan.
  • When teachers in Yangjiang were not paid, they confronted police in a street protest.
  • Police had to stop creditors breaking in to seize equipment in lieu of debts at several factories in southern China.
  • Labor rights groups have long reported owners hiring thugs to threaten workers who demand payment of wages, and this practice is reportedly continuing as owners' purses are pinched in the downturn.
The latest issue of the Far Eastern Economic Review focuses on flaws in China's economic strategy. Emphasizing cheap labor in export-oriented industries has caused income inequality and prevented the development of domestic consumer demand. Now the worldwide economic downturn is stifling income growth.

The Sunday Times warns that problems may intensify after the Chinese New Year, when migrant workers return to their workplaces only to find that they no longer have jobs.