China
slump sparks street protests
Michael
Sheridan, Hong Kong
February 02, 2009
The Australian
BANKRUPTCIES,
unemployment and social unrest are spreading more widely in China
than officially reported, according to independent research that
paints an ominous picture for the world economy.
The
research was conducted for The Sunday Times over the past two months
in three provinces vital to Chinese trade - Guangdong, Zhejiang
and Jiangsu. It finds 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 US demands.
The
new US Treasury Secretary, Timothy Geithner, has alarmed Beijing
and raised fears of a trade war by stating that China manipulates
the yuan to promote exports.
However, a growing number of economists say the unrest proves that
it is not the exchange rate but years of sweatshop wages and income
inequality in China that have distorted global competition and stifled
domestic demand. The influential Far Eastern Economic Review headlined
its latest issue "The coming crack-up of the China Model".
Yasheng Huang, a professor at the Massachusetts Institute of Technology,
says corruption and a deeply flawed model of economic reform have
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 $US5 ($7.80) a day across Asia - a "trickle
up" theory.
The
instability may peak when millions of migrant workers flood back
from celebrating the Chinese New Year to find they no longer have
jobs. That spells political trouble and there are already signs
that the Government's $US585 billion stimulus package will not be
enough to achieve its goal of 8 per cent growth this year.
The
American economist Nouriel Roubini says growth figures of 6.8 per
cent in the fourth quarter of 2008 mask the reality that China is
already in recession - a view privately shared by many Chinese financial
analysts who dare not say so in public.
Even security guards and teachers have staged protests as disorder
sweeps through the industrial zones that were built on cheap manufacturing
for multinational companies. Worker dormitory suburbs already resemble
ghost towns.
In
the southern province of Guangdong, three jobless men detonated
a bomb in a business travellers' hotel in the commercial city of
Foshan to extort money from the management.
The Communist Party is so concerned to buy off trouble that in one
case, confirmed by a local government official in Foshan, armed
police forced a factory owner to withdraw cash from the bank to
pay his workers.
On
January 15 there were pitched battles at a textile factory in the
nearby city of Dongguan between striking workers and security guards.
The next day, about 100 auxiliary security officers staged a street
protest after they were sacked by a state-owned firm in Shenzhen,
a boom town adjoining Hong Kong.
About
1000 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, 2000 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.
In
southern China, hundreds of workers blocked a highway to protest
against pay cuts imposed by managers. At several factories, there
were scenes of chaos as police were called to stop creditors breaking
in to seize equipment in lieu of debts. The Sunday Times
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