Thursday, February 26, 2009

Article - China's mounting pink slips (Middle class tensions)

With an estimated 1.5 million graduates of the class of 2008 still jobless, the government has responded with a plan to create 9 million jobs in 2009, primarily to help build up the country’s infrastructure as well as positions in rural villages

By Christina Larson (IHT)
Sunday, January 4, 2009

Set aside Yao Ming and the furry mascots. The buoyant spirit of the 2008 Beijing Olympics already seems like a lifetime ago. A new icon has recently emerged for today's China: the disgruntled, laid-off factory worker, standing dejected outside a shuttered factory, another victim of the global economic downtown.

As startling as these factory closures have been, the fate of another less-heralded figure may be more significant: the laid-off office worker.

After 30 years of nearly continuous, even momentous, economic growth - which has lifted millions out of poverty and bolstered the ruling Chinese Communist Party - the economy's manufacturing base is slipping. Last month, exports dipped for the first time in seven years.

Mounting factory layoffs this year - around 2 million have been sent packing near the factory city of Dongguan alone - have prompted a string of noisy but isolated protests across the country's southern industrial region. The anxious Chinese government has rushed in with bailout money for companies and some compensation for workers. So far, a thousand sparks haven't become a wildfire. Fretful Chinese workers have yet to channel discontent into unified campaigns, or demands for representation in the political sphere. But whether Beijing can so easily mollify the growing apprehension among the country's middle class could be another story entirely.

That workers haven't linked arms factory to factory and city to city may seem anti-climactic. Then again, consider the realities of China's internal politics. Most linemen were farmers five years ago. They are recent migrants to the cities, on the bottom rung of status and expectations. The combination of fragmented social networks, poor education, and gray legal status (most are "unregistered" urban residents) gives them limited power to organize.

Many have learned to tolerate poor labor conditions, minimal rights, and dubious payroll practices. They are now reacting, loudly, when shunted aside, but what they're demanding is that employers fork over back pay - not any kind of systematic change.

But China's middle class (now some 100 million to 150 million strong) is a different animal. The country's economic and political fabric will face an unheralded challenge if large numbers of pink slips go to white-collar workers in 2009 - the kind of people who have grown accustomed to having more choices and a higher standard of living.

In recent years, they haven't had many complaints. But when roused, they can potentially punch back. Perhaps the most striking example of citizens exerting direct pressure on national policy came in 2004, when a network of middle-class Chinese environmental activists and lawyers, pointing to Beijing's own "environmental impact assessment law," convinced the government to halt planned dams on China's last wild waterway, the Nu River.

The last time China's middle class really got agitated, of course, was on the heels of another financial crisis. That was in 1989, following a year of spiraling inflation, price shocks, and cash-flow woes. One telling, if unsexy, demand of the university students protesting at Tiananmen was to hold accountable those who caused inflation.

Much has changed in two decades. China's financial managers are far more sophisticated. There are new unemployment and Social Security schemes that, in theory, offer more safety nets to soften the blow for laid-off urban workers. But as Pieter Bottelier of the Johns Hopkins University School for Advanced International Studies in Washington points out, those systems, created within the last few years, are still in their nascent stages.

At the same time, there is, on paper, a broader array of options for disgruntled people to blow off steam. In recent years, Beijing has passed regulations that purport to give citizens limited avenues for policy feedback - including posting draft versions of certain "laws closely related to the interests of the people" on government Web sites for public comment. Such channels have so far remained basically dormant (and may well have been created quite cynically), but a prolonged financial slump could raise their profile.

Whether China's middle class will ultimately focus on discreet issues (more unemployment benefits) or broader concerns (more freedom for the media to detail white-collar problems) remains unknown. But the deeper the financial hole, the less likely political complacency.

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  1. From the article, what are some of the more pressing challenges the CCP currently faces?
  2. Discuss the possible measures the government can undertake to reduce the social problems that are likely to result from the financial crisis.

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