Latest News

Despite continued economic growth, China fears labor unrest

BEIJING — The People's Republic of China is hoping that Long Chengxin keeps his job.

The 55-year-old, who has closely cropped hair and the energy of a much younger man, uprooted his family of five from the southwestern province of Sichuan about a decade ago. After a series of odd jobs, he sells traditional Chinese medicine in a suburb of the capital.

When he got the position last March, it seemed stable, but now he has his doubts.

This year, Beijing's leadership hopes for an 8 percent increase in gross domestic product — the total of goods and services produced — the minimum needed, they say, to maintain employment levels.

It's a measure of China's economic success that its growth goal approaches 10 percent while Western countries try to prevent theirs from dipping into the negative. It's also a sign of China's underlying political challenges that the leadership considers 8 percent the brink of social disorder.

Communist officials in Beijing worry that the same 1.3 billion people who provided an army of low-wage workers during a decade of double-digit expansion will be a source of trouble if the government-led economy can't employ enough of them.

The country needs about 24 million new jobs this year, but Yin Weimin, the minister of human resources and social security, has warned that only 12 million can be created and unemployment will remain "severe."

It's clear that officials at the helm of China's one-party political system are unnerved by the specter of millions of unemployed people, some of whom, like Long, lost their farms — a traditional release valve for the peasantry — to corrupt officials back home.

Protests flared in industrial centers this year after export businesses shuttered amid the global downturn. Fighting in a factory town squeezed by layoffs sparked the country's worst ethnic violence in years. The rumor of ethnic Uighurs raping Han Chinese women in southern Guangdong province, hard hit by unemployment, led to a brawl at a toy factory in late June. News of the fight spread to the western region of Xinjiang, and riots there between Uighurs and Hans in early July killed more than 190 people.

People such as Long have begun to wonder what's coming.

"The situation of the migrant workers market was good two years ago, but now there are so many migrant workers flowing into Beijing that it's difficult to find jobs," Long said.

The government responded last November, unveiling a $585 billion stimulus plan that fueled most of last quarter's GDP growth of 7.9 percent.

Next year, however, the stimulus plan runs out.

"Without the government stimulus package, and if the global economy hasn't recovered by the end of 2010, if we're lucky China will have a GDP growth of 7 percent," said Zhang Youxian, an analyst with the state-owned Bank of China's Institute of International Finance. Anything below 8 percent growth "is a huge problem for social stability," he said.

Zhang was careful to add that such a scenario was overly pessimistic because, among other things, the world economy probably will bounce back, and there could always be more stimulus spending.

In the long term, the government wants to encourage domestic consumption and de-emphasize exports, a process that will require politically sensitive moves such as currency reform and a large restructuring of the work force.

"Lots of export factories will be shut down, and a lot of migrant workers will lose their jobs," said Ma Yang, the director of a Beijing-based migrant workers advocacy group called On Action.

Ma paused and considered his words: "If the government does not provide assistance to help them through this economic transition, it will create a lot of social problems."

(Lasseter, McClatchy's Moscow bureau chief, is on temporary assignment to Beijing.)


Biden had it right: Rural Russia is dying of poverty, neglect

Flood of Afghan heroin fuels drug plague in Russia

Check out McClatchy's politics blog, Planet Washington