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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Sun Nov 16, 2008 7:49 pm Post subject: 67000 Chinese factories closed |
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eek!
http://www.nytimes.com/2008/11/14/world/asia/14china.html?_r=2&oref=slogin&pagewanted=all&oref=slogin
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CHANG�AN, China � Wang Denggui, father of three, arrived more than a year ago in the palm-lined streets of this southern town with a single goal: toil in a factory to save for his children�s school tuition.
But the plans of Mr. Wang and thousands of co-workers unraveled at noon on Nov. 1, when the Taiwanese chairman of their ailing shoe factory climbed over a factory wall to flee the country and his debts. That left several American shoe companies with unfilled orders and 2,000 workers without jobs.
�He just ran without telling anyone,� Mr. Wang said.
For decades, the steamy Pearl River Delta area of southern Guangdong Province served as a primary engine for China�s astounding economic growth. But an export slowdown that began earlier this year and that has been magnified by the global financial crisis of recent months is contributing to the shutdown of tens of thousands of small and mid-size factories here and in other coastal regions, forcing laborers to scramble for other jobs or return home to the countryside.
Furthermore, the slowdown inhibits China�s ability to work with other nations in alleviating the worldwide crisis.
The Pearl River Delta, known as the world�s factory, powered an export industry that pushed China�s annual growth rate into the double digits and provided work for migrants from interior provinces with poor farmland. But circumstances have changed quickly. The slowdown in exports contributed to the closing of at least 67,000 factories across China in the first half of the year, according to government statistics. Labor disputes and protests over lost back wages have surged, igniting fear in local officials.
After the shutdown of their shoe factory, called Weixu in Chinese and China Top Industries in English, Mr. Wang and some co-workers took to the streets in protest, demanding two months of back pay, or $440 on average. The government called in the riot police. Seven workers were thrown in jail and six were beaten, including Mr. Wang, he said.
�I plan to return home once I get my money,� Mr. Wang said as he stood outside the factory on Tuesday, showing the bloody shin wound that he said resulted from a blow from a metal baton. (The police declined to comment.) �I�m over 50 years old, and I won�t be able to find work. I�ll just retire.�
Under pressure from Beijing to maintain social stability, local officials are also trying to tamp down unrest by doling out back wages. Here in Chang�an, after the worker protest, the government shelled out more than $1 million to pay back wages to most of the workers at the shoe factory. (Mr. Wang and some other laborers say they are still without back pay.)
The slowdown in exports has accelerated a major shift in the nature of Chinese manufacturing: small factories that were already being pinched by rising costs of labor, transportation and raw materials, as well as by the appreciating yuan, are closing en masse. That is especially the case in these towns scattered around the city of Dongguan, known for churning out low-end products. Soon the labor-intensive factories that rely solely on migrant work could disappear from southern China, and foreign companies could contract with similar factories in Vietnam and other countries where costs are lower.
�There�s very serious damage being done down there, I don�t deny it, and I think it�ll get worse because we haven�t seen the full impact of the economic downturn in Europe,� said Arthur Kroeber, managing director of Dragonomics, an economic research and advisory firm based in Beijing. �I think next year we might see export growth in the country as a whole go down to 0 percent.�
The export sector is still growing but has slowed considerably; year-on-year growth was at 9 percent in October compared with 26 percent in September 2007, Mr. Kroeber said.
The social problems arising from the slowdown have stirred anxiety in the top leadership of the Communist Party, whose legitimacy is based on maintaining economic growth. Prime Minister Wen Jiabao is pushing for policies that will increase domestic consumer consumption to wean China off its reliance on exports. Last Sunday, the government unveiled a stimulus package worth $586 billion over the next two years � the largest ever announced in China � to help create jobs, mostly by building new transportation infrastructure.
Foreign governments expecting China to take the lead in addressing the global crisis will be disappointed, say analysts and scholars. Chinese officials say they are focused on trying to ease domestic problems and keeping the country�s annual growth rate above 8 percent, which they see as vital to generating enough new jobs. Some analysts say economic expansion could drop to as little as 5.8 percent in the fourth quarter this year, down from about 11 percent in 2007.
�I think China foresees that it�ll need to spend a lot of money to get itself out of the current domestic situation,� said Victor Shih, an assistant professor of political science at Northwestern University who studies the political economy of China. �On the global financial crisis, China will not take a leading role.�
The mass layoffs have led to a profound change in the movements this year of migrant workers like Mr. Wang who spend virtually the entire year away from home. Many are heading home early for the Chinese New Year, in late January, and say they might not return to work in the coastal regions. A worker in the railway station in Guangzhou said that from Oct. 11 to Oct. 27, there were 1.17 million passengers on trains leaving the station, an increase of 129,000 over the same period last year. There have been reports of a similar jump in other regions.
Once in the interior, the workers will have less incentive than in the past to return to the coastal provinces. Rising grain prices have made farming more profitable. The Chinese government announced a rural land reform policy last month that could spur some farmers to stay on their land and make better use of it.
A growing number of factories have opened in the interior provinces as well. Wages are still lower than on the coast, but have risen quickly in recent years.
In Zhangmutou, a town here in the Dongguan area, many of the 7,000 workers who lost their jobs when a Hong Kong-owned toy factory called Smart Union shut down last month have returned home. Li Dongmei, a former human resources employee, said her two older brothers who worked in the factory had taken the 20-hour bus ride home to Hunan Province. Ms. Li, though, still lives across from the abandoned factory building because she is eight months pregnant.
�This place isn�t too stable economically,� Ms. Li, 25, said as she sat on a terrace outside her cramped apartment. �Guangdong isn�t so good anymore.�
As was the case with the Weixu shoe factory, Smart Union closed without any notice, and hundreds of angry workers poured into the streets to demand that the local government pay them back wages. Many such factories were run by Taiwanese or Hong Kong managers who fled the mainland. Chinese police and courts have limited reach in Hong Kong, which has a separate legal system, and they have almost no ability to prosecute people in Taiwan, which is treated as a renegade province and does not have formal political or diplomatic relations with the mainland.
The wave of factory shutdowns is taking place at a time when migrant workers are more aware than ever of their legal rights and know how to put pressure on local governments. Two national labor laws were enacted in January that, among other things, require companies to pay severance and give out more long-term labor contracts. The laws could lead to more labor disputes and protests, said Mary Gallagher, director of the Center for Chinese Studies at the University of Michigan.
�Increasingly, the migrant workers know their rights,� she said.
Here in Chang�an, nearly 200 workers showed up outside the south gate of the four-story Weixu factory on Tuesday to demand from the government severance payments that generally ranged from $1,500 to $3,700 each. They signed their names on a list and put a red fingerprint stamp next to each signature.
�No one�s gotten this subsidy yet,� said a woman from Qinghai Province who spoke on condition of anonymity because local officials had scolded her for talking to a local newspaper. �The government has been helpful in giving us our back pay, but it hasn�t been helpful in paying the subsidy.�
The Taiwanese chairman of the shoe factory, Zhuang Jiaying, did not return calls seeking comment. The collapse of the factory started a domino effect: Related businesses, like a smaller factory that put labels on Weixu�s shoe boxes, have also failed. Hundreds of additional laborers have lost their jobs, and more than 200 creditors have yet to collect millions of dollars, said Yang Qiusheng, the manager of the factory that handled the labels.
�I had to fire people who had worked for me for a long time,� he said. �When I see this shoe factory, this enterprise, I feel very sad and sorry. I never thought it would end like this.�
Keith Bradsher contributed reporting from Guangzhou, and Jimmy Wang from Chang�an. Huang Yuanxi contributed research. |
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canuckistan
Mod Team
Joined: 17 Jun 2003
Location: Training future GS competitors.....
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| Posted: Sun Nov 16, 2008 10:17 pm Post subject: |
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| Has been going on for a while. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sun Nov 16, 2008 10:19 pm Post subject: |
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I knew factories were closing, but I never thought it would be so many.
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| Two national labor laws were enacted in January that, among other things, require companies to pay severance and give out more long-term labor contracts. |
This is important. These laws were opposed by Taiwan financiers, who built the Guangdong delta. Now the Taiwanese capital is fleeing China for more Southern locales, particularly Vietnam.
Oh, and I think there's some slowdown in the global market, too. |
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sojourner1
Joined: 17 Apr 2007
Location: Where meggi swim and 2 wheeled tractors go sput put chug alugg pug pug
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| Posted: Mon Nov 17, 2008 12:42 am Post subject: |
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| So the gigs up on the big China boom. Look for this Asia boom as we've know it to be since about 2001 to slow way down. |
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Milwaukiedave
Joined: 02 Oct 2004
Location: Goseong
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| Posted: Mon Nov 17, 2008 3:11 am Post subject: |
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It was bound to hit China eventually. The slowdown in the rest of the world is going to hurt them. Unfortuantely you can't have an economy like a runaway train and not expect it to go off the tracks.
My brother-in-law had invested a bunch of money in Chinese stocks and I'd been urging him to sell since last Fall. He didn't take my advice and lost 50% of his money. |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Mon Nov 17, 2008 5:58 am Post subject: |
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| Yeah but China have options. They're going to spend a load of money on infrastructure projects to boost employment for the next few years. They can also move up the value chain in manufacturing. They've been making mostly cheap and simple stuff. |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Mon Nov 17, 2008 6:31 am Post subject: |
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| Bigfeet wrote: |
| They've been making mostly cheap and simple stuff. |
Increasingly they have been making deadly stuff, too. |
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laogaiguk
Joined: 06 Dec 2005
Location: somewhere in Korea
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| Posted: Mon Nov 17, 2008 7:46 am Post subject: |
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| Bigfeet wrote: |
| Yeah but China have options. They're going to spend a load of money on infrastructure projects to boost employment for the next few years. They can also move up the value chain in manufacturing. They've been making mostly cheap and simple stuff. |
They'll spend lots on useless infrastructure things (it's always useless) and end up in the same position in a few years, but with a big abandoned dinosaur park on the side of the interstate  |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Nov 17, 2008 9:13 am Post subject: |
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| laogaiguk wrote: |
| Bigfeet wrote: |
| Yeah but China have options. They're going to spend a load of money on infrastructure projects to boost employment for the next few years. They can also move up the value chain in manufacturing. They've been making mostly cheap and simple stuff. |
They'll spend lots on useless infrastructure things (it's always useless) and end up in the same position in a few years, but with a big abandoned dinosaur park on the side of the interstate |
Laogaiguk,
You're a student of modern Chinese architecture, I see. |
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Bigfeet
Joined: 29 May 2008
Location: Grrrrr.....
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| Posted: Mon Nov 17, 2008 2:21 pm Post subject: |
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| laogaiguk wrote: |
They'll spend lots on useless infrastructure things (it's always useless) and end up in the same position in a few years, but with a big abandoned dinosaur park on the side of the interstate |
No it's not useless. Most of the interior is still under-developed. Building infrastructure there will bring jobs nearer to the people and help keep wages down. It's not over-developed like it is in the US. |
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VanIslander
Joined: 18 Aug 2003
Location: Geoje, Hadong, Tongyeong,... now in a small coastal island town outside Gyeongsangnamdo!
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| Posted: Thu Nov 20, 2008 10:05 am Post subject: |
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what a bad lede:
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| CHANG�AN, China � Wang Denggui, father of three, arrived more than a year ago in the palm-lined streets of this southern town with a single goal: toil in a factory to save for his children�s school tuition. |
... what about China's One Child Policy?
Can't even get into the story because of a side issue unaddressed by some reporter oblivious to readers' expectations and frame of reference |
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laogaiguk
Joined: 06 Dec 2005
Location: somewhere in Korea
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| Posted: Thu Nov 20, 2008 10:07 am Post subject: |
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| Kuros wrote: |
| laogaiguk wrote: |
| Bigfeet wrote: |
| Yeah but China have options. They're going to spend a load of money on infrastructure projects to boost employment for the next few years. They can also move up the value chain in manufacturing. They've been making mostly cheap and simple stuff. |
They'll spend lots on useless infrastructure things (it's always useless) and end up in the same position in a few years, but with a big abandoned dinosaur park on the side of the interstate |
Laogaiguk,
You're a student of modern Chinese architecture, I see. |
I've lived there long enough and seen enough stuff being put up to know that most of it will fall down in about 10 years. |
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laogaiguk
Joined: 06 Dec 2005
Location: somewhere in Korea
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| Posted: Thu Nov 20, 2008 10:10 am Post subject: |
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| Bigfeet wrote: |
| laogaiguk wrote: |
They'll spend lots on useless infrastructure things (it's always useless) and end up in the same position in a few years, but with a big abandoned dinosaur park on the side of the interstate |
No it's not useless. Most of the interior is still under-developed. Building infrastructure there will bring jobs nearer to the people and help keep wages down. It's not over-developed like it is in the US. |
You didn't read my post well or missed the particulars of the meaning. I said they would spend it on useless infrastructure, not that building infrastructure is useless |
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Kuros
Joined: 27 Apr 2004
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| Posted: Thu Nov 20, 2008 10:29 am Post subject: |
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| VanIslander wrote: |
what a bad lede:
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| CHANG�AN, China � Wang Denggui, father of three, arrived more than a year ago in the palm-lined streets of this southern town with a single goal: toil in a factory to save for his children�s school tuition. |
... what about China's One Child Policy?
Can't even get into the story because of a side issue unaddressed by some reporter oblivious to readers' expectations and frame of reference |
Chinese One Child Policy does not normally apply to those in the country-side.
The best source I could find for that was this NYTimes article.
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| Most urban couples are limited to a single child, while farmers are often allowed to have two. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Nov 20, 2008 1:44 pm Post subject: |
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http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/11/20/neil-hrab-fear-of-labour-unrest-frays-nerves-in-beijing.aspx
Fear of labour unrest frays nerves in Beijing
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The latest sign that we face a truly global economic malaise comes from China -- "No Layoffs Without Permission," reads a headline in Tuesday's China Daily. The accompanying article explains that employers in the Chinese provinces of Shandong and Hubei who "want to lay off 40 or more workers have been told [by officials that] they must first apply for approval from their local human resources and social security authorities..."
The Chinese authorities won't come out and say it directly, but they are clearly worried about how the global economic slowdown might stimulate labour unrest. Factories throughout China (not only in Hubei and Shandong) are receiving fewer and fewer orders, particularly as U.S. demand slows, meaning their owners may need to start shedding staff in order to weather the fall-off in business.
Rising unemployment is already of concern to Chinese authorities, particularly in Shandong, according to China Daily -- "Shandong being one of China's major export regions, the number of people without jobs in the province rose by more than 680,000 in the first nine months of the year, according to official figures."
As the London Guardian notes in a related story, "China sees thousands of protests each year," and many (but not all) are related to labour unrest. What the Chinese probably fear most is an outbreak of the kind of ferocious rioting by dismissed workers that shocked neighbouring India back in September.
On September 22, about 200 Indian workers who had been dismissed from their jobs at a vehicle transmission factory stormed their former workplace. During the resulting riot, police claim some of the fired workers grabbed L K Chaudhury, CEO of the company that owned the factory and killed him by allegedly hitting him in the head with a hammer.
While Indian business leaders condemned Chaudhury's murder, Oscar Fernades, India's Minister of Labour, said the CEO's death was a "warning" to managers and executives. "It is my appeal to the managements that the workers should be dealt with compassion. There are disparities in the wages of permanent employees and contract workers. The workers should not be pushed so hard that they resort to whatever that had happened in [Chaudhury's case]," Fernades said.
Although China's government is still officially Communist, it's hard to imagine a top government official calling for workers who just lynched their boss to be treated with "compassion." The more likely reaction by that regime to any similarly violent action by laid-off workers is not difficult to predict, as this link reminds us. |
China watchers have long worried about the effects of a severe global recession on 'social stability'. The future is now.
The massive stimulus has to be examined within this context. |
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