China – Growing Fear Of Unrest

| January 30, 2009

Guizhou Riot.jpg

China has undergone unprecedented growth over the last 15 years, as the communist government worked hard to convince the west to ship entire production industries to their country to be performed cheaply (if at somewhat reduced quality) in exchange for the means to higher profit margins. As a result a vast amount of rural chinese moved to coastal cities to work in these factories making everything from household goods to iPods. Now that the western consumer is finding the magic money well running dry, the appetite for cargo ships full of goods from China has begun to wane.

The factories in these costal cities that had seen explosive growth now find themselves facing millions of unemployed workers. These workers believed the promise of hard work and long hours would mean a better life, but now they are no longer needed. With chinese new year, many of these workers are traveling home to their rural villages to be with family. Many in the government are hoping against hope they stay there and forget all about the disappointment in the big city. From the UK guardian:

China fears riots will spread as boom goes sour

Today millions will leave the cities to return to their rural family homes for the new year celebrations. But this year Beijing hopes the newly jobless revellers will stay there – to prevent a fresh wave of unrest in the cities

They surged into the grimy streets around the factory: first scores, then hundreds, then more than a thousand, as word spread and tension loaded the stale, grey air. The boldest overturned a police van and smashed up motorcycles, then tore through the building destroying computers and equipment. The mood was exhilarated, angry and frightened.

“It happened so quickly … There were maybe 500 involved and another 1,000 watching them. People were yelling: ‘It’s good to smash’,” said a witness.

Today should be the highlight of the year for migrant workers in the country’s southern manufacturing hub, but the hundreds of millions who have travelled home for their annual family reunion have little to celebrate. This is the year of the ox in the Chinese zodiac; a symbol of hard work and tenacity. But no one feels bullish as exports plummet and factories shut their doors.

Officials announced this week that growth fell to 6.8% in the last quarter of 2008. Enviable as that sounds to countries in recession, it follows five years of double-digit growth and rising expectations. Just as crucially, experts believe that China needs 8% growth to provide enough jobs for new entrants to the labour force. But economists predict that the rate could fall as low as 5% this year.

Sadly, many Americans are still drinking deeply from the cup of “Hope and Change”, and area not looking for the next hammer to fall. The situation was bad enough in November, but once the turmoil starts around the world, in the hard hit places, we will begin to see what kind of wreckage has been created.

This is a tough situation, on one hand I would rather not see a lot of civil violence erupt in the most populous nation on the planet (and they have nukes), but I honestly believe that China is destined to be a democracy. The people of China are probably starting to understand that the party insiders are the ones who really benefited from the boom, at their expense. Things could get ugly.

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Category: China, Credit Backlash, Main

About the Author ()

Bruce Henderson is a former Marine who focuses custom data mining and visualization technologies on the economy and other disasters.

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