CHINESE ECONOMIC OPTIMISM FALLS ON NEW JOBLESS DATA
The 'Chinese Century' comes to a grinding halt
One hundred million people are now out of work in what has been the world’s fastest growing economy. Figures released by the Chinese government are thought to be vastly understated but this is the first admission of a crisis so huge that it could suck the rest of the world into an economic black hole.
The Chinese economic miracle has come full circle as internal competition has accelerated automation of manpower-intensive production lines.
Due to the West’s restrictions on ‘Made in China’ products, China has outsourced much of its production to low-wage Asian countries.
Chinese agriculture has changed dramatically from small rural farms to large-scale automated valleys that have left local communities decimated. The UN estimates that an additional 200 million people could be ‘out of work’ by Western definitions.
While India dominates high-value service jobs, China has failed to create similar opportunities at the top end of the work scale.
A new unemployed underclass has been created, aware of their ‘rights’ and with unprecedented support of international activist groups. Tomorrow’s ‘One Million Farmer’ march on Tiananmen Square will be a dramatic test of the Chinese government’s attitude.
ANALYSIS >> SYNTHESIS: How this scenario came to be
Erle Stanley Gardner, prolific author and creator of the Perry Mason character, wrote a comment on China in one of his short stories: “The Chinese (man) of wealth always builds his house with a cunning simulation of external poverty. In the Orient one may look in vain for mansions, unless one has the entrée to private homes. The street entrances always give the impression of congestion and poverty, and the lines of architecture are carefully carried out so that no glimpse of the mansion itself is visible over the forbidding false front of what appears to be a squalid hovel.”
In an article in the Sunday Telegraph in June 2005, Mark Steyn wrote a somewhat critical article on China, claiming that today China was creating the opposite perspective: “What we’re seeing is an inversion of what Erle Stanley Gardner observed: a cunning simulation of external wealth and power that is, in fact, a forbidding false front for a state that remains a squalid hovel.”
Less than 200 million of the population is directly involved in the current economic miracle. A billion people are still cut off from economic activity and tied into small rural farms. Commercial pressures will create massive drives for increased productivity and decreased costs – no doubt resulting in massive social pressures.
China is a country with few human rights and a largely uncritical population beaten into submission by decades of Maoist rule during which ten times as many people were ‘eradicated’ than under Nazi rule.
Today this totalitarian attitude to individuals emerges in the most surprising ways. Key in words such as ‘democracy’ or ‘freedom’ on MSN’s new Chinese internet portal and you get a message “This item contains forbidden speech. Please delete the forbidden speech.”
With increasing affluence and a growing middle class it is quite likely that pressures on the government will change in line with other growing countries. Demands for increased personal freedoms and more democratic government will likely emerge. While the economy and opportunities are growing these are likely to be low key – suppressed by the positive effect of improved personal lifestyles. Should this economic rainbow fade, perhaps with fewer job opportunities (such as textile off-shoring to other Asian countries) or massive layoffs (due to automation and large-scale consolidation) then these pressures could combine to create massive instabilities in China, and the world.
2008: China re-affirms contempt for intellectual property
Almost all of Disney’s merchandise is manufactured in China, yet, at another level, it is also the country that defrauds Disney and pirates its movies. The same is true of fashion labels such as Polo, Rolex and Tommy Hilfiger. Commodity pharmaceutical products are now starting to follow the same path. “You may be able to hear a huge sucking sound: that’s manufacturing moving to China and Asia”, says the EU commercial representative in Shanghai.
Under international pressure to reform the country’s ambivalent attitude to copyright and patents, the government issues a surprising statement that flies against all expectations:
“China is a developing nation and needs access to intellectual capital to address the education and development needs of the whole population.”
The US and EU governments are starting to get edgy. “China hasn’t invented or discovered anything of significance for 500 years and the careless attitude to IP shows why. China is the biggest copyright and patent thief in history, and this comes from old China’s contempt for all ‘private’ property. Nothing’s changed” says a leaked EU report.
2009: Human rights issues take centre-stage
China’s appalling human rights record, and the government’s apparent unwillingness to address international concerns, has made it top-of-mind for the press and pressure groups. Amnesty International makes 2008 a year to focus on “Chinese Humanity”.
China still jails more journalists than any other country in the world. Pressure is growing to release, or bring to trial, several high-visibility figures:
- Zhao Yan, New York Times’ Beijing bureau staffer – arrested in September 2004 and never brought to trial. The fifth anniversary of his arrest is the occasion for a massive demonstration in Beijing, violently suppressed by police.
- Ching Cheong, a correspondent for the Straits Times of Singapore, disappeared in April 2005 while seeking copies of unpublished interviews with Zhao Ziyang, the Communist Party general secretary, who fell from favor after declining to support the Tiananmen Square massacre. A news report claims that his decomposed body has been found in the grounds of a government office outside Beijing.
Nelson Mandela is asked to address a mass rally planned for London’s Trafalgar Square.
2011: Competitiveness creates rampant automation
During the past ten years Chinese labor costs have doubled, although they are still extremely low compared to all Western countries. Chinese manufacturing companies are being forced, by commercial and competitive pressures, to introduce automation into their factories and to shed jobs. What took the US 50 years in industrial automation is expected to happen in China in less than ten years.
In agriculture, the revolution is even more astonishing. From 1900 to 2000, the US agricultural workforce changed from more than 50% of the workforce to just 3%. Today, less than 3% of the US workforce produces all US agricultural produce. It is now expected that by 2020 China will have achieved the same level of automation and large-scale farming.
In the five years since 2005, it is estimated that 50 million farm jobs have been displaced by farm consolidation and automation. It is clear that the figures for 2010 could double that number. Since no farmers ‘own’ their land (it’s all owned by the state) there is very little to stop consolidation by powerful farming ‘triads’.
2013: Job losses mount in industry and agriculture
While the Chinese government tries to disguise the potential impact, outside observers claim that more than 50 million Chinese industrial workers are now literally ‘out of work’. With no government programs to monitor these numbers and no redundancy payments it is extremely difficult to obtain accurate numbers.
In the agricultural sector, there has been increasing militancy in remote areas where in many rural communities more than half the families have been deprived of their primary income and food source. They are now completely dependent on the help offered by their communities. Consolidation of family farms and agricultural automation have vastly increased productivity but decimated the local family infrastructure based on subsistence farming. UN estimates state that as many as 200 million farm workers could be ‘out of work’ by Western standards.
2015: One million farmers lead march to Tiananmen Square
As Western estimates now claim that more than 200 million Chinese have been made jobless, by automation and lack of government involvement, a march on Tiananmen Square led by one million farmers, attracted more than half a million residents of Beijing.
Unlike India, most Chinese do not have the language and personal skills to move up-stream into higher skilled jobs. Western companies have continued with their massive push to outsource service functions but have given massive preference to India, taking advantage of English language competencies and the enormous commercial success of service industries, medical tourism and pro-active government policies.
Although there are more than 100 deaths associated with the march, the police appear unable or unwilling to cause a major confrontation. Some police are seen to sympathize with the marchers saying that they “understand their problems”.
The Communist party is in turmoil as they try to develop policies that will address the commercial needs of the population and create future stability, while not contradicting their increasing embrace of global commercial interests. What the West has been calling ‘Commie-Capitalism’ has become a massive dichotomy for politicians.
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