During a recession, what happens to huge country that depended upon exports for its great leap forward? Massive unemployment…and riots. TimesOnLine recently did research on the kind of violent spasm now hitting China: “Violent Unrest Rocks China.”
The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade – Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.
While troubling for the Chinese government, this should strengthen the argument of Premier Wen Jiabao, who will say on a visit to London this week that his country faces enormous problems and cannot let its currency rise in response to American demands.
More of the hair that bit the dog.
Having used a peg currency to help it build its export-oriented economy, China, like an old drunk, now is taking another sip to ward off the disastrous hangover. Not healthy, but understandable. As I have said on this blog repeatedly, global growth has to be organic.
Yasheng Huang, a professor at the Massachusetts Institute of Technology, said corruption and a deeply flawed model of economic reform had led to a collapse in personal income growth and a wealth gap that could leave China looking like a Latin American economy.
Richard Duncan, a partner at Blackhorse Asset Management in Singapore, has argued that the only way to create consumers is to raise wages to a legal minimum of $5 (£3.50) a day across Asia – a “trickle up” theory.
Below is just a sample of the kinds of events occurring throughout the “three provinces vital to Chinese trade – Guangdong, Zhejiang and Jiangsu.”
Hundreds of workers protested outside the city government so we ordered the boss to settle the back pay and sent police armed with machine-guns to take him to the bank and deliver the money to his workforce that very night,” the official said.
On January 15 there were pitched battles at a textile factory in the nearby city of Dongguan between striking workers and security guards.
On January 16, about 100 auxiliary security officers, known in Chinese as Bao An, staged a street protest after they were sacked by a state-owned firm in Shenzhen, a boom town adjoining Hong Kong.
About 1,000 teachers confronted police on the streets of Yangjiang on January 5, demanding their wages from the local authorities.
In one sample week in late December, 2,000 workers at a Singapore-owned firm in Shanghai held a wage protest and thousands of farmers staged 12 days of mass demonstrations over economic problems outside the city.
All along the coast, angry workers besieged labour offices and government buildings after dozens of factories closed their doors without paying wages and their owners went back to Hong Kong, Taiwan or South Korea.
Global growth on both sides of the planet has been ill formed and ill-conceived, a point I have repeatedly made in every way I know how.