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NYT Reports On The "Biggest Risk Facing China" As Beijing Launches "Unprecedented" Crackdown On Angry Workers

Tyler Durden's picture




 

One month ago, in "The Biggest, And Most Underreported, Risk Facing China" we laid out the laundry list of the most prominent issues that have troubled China over the past several years, to wit:

  • a slowing economy crippled by soaring debt, now over 300% of GDP
  • an economy which is overly reliant on fixed investment
  • an artificially high exchange rate which is adversely impacting exports and impairing trade, in a "beggar thy neighbor" world everyone is rapidly devaluing their own currency
  • the feedback loop of plunging commodity prices and highly levered domestic corporation which can not pay their annual interest expense payments at current prices of industrial commodities, leading to surging business failures and defaults
  • a burst housing bubble which recently popped (although slowly growing again)
  • a burst stock market bubble which recently popped (although slowly growing again)
  • non-performing loans, as high as 20%, and metastssizing across the Chinese banking sector

Many, if not all of the above have become conventional wisdom as the mainstream media has finally covered most of them, with its usual 2-4 year delay.

However, as we warned one month ago, one Chinese risk, perhaps the biggest one, which has so far crept deep under the radar, is also the biggest one - which may explain why so few have noticed it - namely social discontent, resulting from a breakdown in recent "agreeable" labor conditions, wage cuts and rising unemployment, leading to labor strikes and in some cases, violence.

To be sure, over the past few months we have chronicled several such incident which suggest that the labor market is rapidly becoming China's biggest risk factor, including:

As we further noted last month, the best confirmation just how serious the employment situation in China is getting comes courtesy of the China Labour Bulletin website, which tracks the number of largely unreported labor protests and strikes across China.

We then demonstrated how deteriorating employment conditions have become a gaping risk for China's politburo by showing the total number of strikes over the past 5 years as of the end of October:

 

Today we decided to revist  the data from the strike data from the China Labor Bulletin and we found that not only has the total number of strikes in 2015 surged by over 15% in just one month to 2,334 from two thousand a month ago...

 

.... but the number of worker strikes in November alone just hit an all time high.

 

And as the chart of China's strikes goes increasingly exponential, others have finally started to notice.

Enter the NYT which overnight reported that "China Arrests at Least 3 Workers’ Rights Leaders Amid Rising Unrest" in which it says that "police in southern China have arrested at least three workers’ rights leaders in recent days, labor groups and activists said on Saturday. The detentions come amid rising labor unrest in southern China, one of the world’s most important manufacturing centers, and are prompting concern that the Communist Party is extending its latest crackdown on civil society to a new arena."

Precisely as we said would happen, the rising labor discontent is forcing the government to retaliate. Only this time the Chinese government is hopeless: if and when the angry workers, several hundred million of them, decide to take their anger out on their communist rulers, not all the arrests in the world, not even the full mobilization of the PLA, will do anything to stem this unprecedented tide of bodies which, simply due to its vast numbers, is practically unstoppable.

The rest of the story is self-explanatory: during the good times, everyone was happy. But now that wages are sliding, and jobs are suddenly hard to come by, workers (many of whom recently fired), do what they do everywhere around the world: they get angry, go on strike, protest, and break or burn things down.

When the economy in Guangdong, China’s richest and most populous province, was booming, the authorities apparently did not see labor activism as a threat. After strikes by workers at Honda auto parts plants in the province in 2010, for example, many workers won higher wages and benefits.

 

But now, with many factories moving to regions where lower wages prevail — or to other countries, like Vietnam — labor unrest is rising, said Geoffrey Crothall, a spokesman for the China Labor Bulletin, which promotes independent labor unions in China and tracks strikes and other labor protests nationwide. Local governments in Guangdong are often the focus of workers’ demands after factory bosses leave town, sometimes with wages and pension benefits in arrears, he said.

Not surprisingly, the NYT used precisely the same source as we did a month ago, to reach the same conclusion:

According to figures from the group, the number of strikes and protests in Guangdong has more than doubled in recent months, rising to 56 in November from 23 in July.

Clearly the rise in the number of protests and increase in labor activism has got the authorities worried,” Mr. Crothall said in a telephone interview. “They don’t know how to respond. And the only solution they can come up with is by cracking down on the people who are actually trying to help.”

Which, as we warned a month ago, is a huge problem for not only China's government but its economy.

One Chinese researcher on labor issues, who asked not to be identified in order to speak freely about the arrests, said that at least 16 activists had been detained or questioned and released in the crackdown on the Panyu Workers’ Center, or had disappeared with no information about their whereabouts. He said the detention of Mr. Zeng might have been a signal to workers not to get involved in labor movements outside the Communist Party-controlled All-China Federation of Trade Unions.

 

“They want to make an example of them for worker rights’ defense in the future — don’t get involved with these labor organizations,” the researcher said. “They realize that the economic slowdown and decline of industry is creating widespread bankruptcies and unemployment, and labor incidents will increase.”

Did we say the "biggest, most underreproted risk facing China"? Why yes we did. At least it is now being reported.

“There have been arrests and crackdowns before on grass-roots labor organizations here,” one activist, He Shan, said in a telephone interview from Shenzhen, a mainland city that abuts Hong Kong. “But this is the most concentrated, the most serious. For us, this is unprecedented.”

For now China is doing all it can to keep this critical story under the radar: "A call to the Public Security Bureau in Foshan went unanswered on Saturday. A man answering the phone at the Guangzhou Public Security Bureau referred a reporter to the police department’s propaganda office, where a call made after working hours went unanswered."

However, we expect that as more read our original piece and this NYT sequel, the reality of what is about to unfold on the ground in China will quickly shift attention from such trivia as insolvent commodity companies, manipulated markets, massive debt, and collapsing trade, and focus on the one risk that China has no way to "manipulate" under the rug - several hundred million very angry workers.

Finally, for those curious what happens next, the answer is still unclear but at least we now know why China's police was spending weeks last spring training for a "working class insurrection."

For those who missed it the first time, here are the May 2014 Stunning Images Of Chinese Riot Police Training For A "Working Class Insurrection"

 

May 11, heavy rain, the Shenzhen Municipal Public Security Bureau carried out emergency disposal operations training activities. Participating in the training team for a variety of different emergencies riot synthesis disposal training.

"Demonstrators" prepare to impact SWAT.

 

Special police armed with riot shields are ready, surrounded by "demonstrators."

SWAT are quick to reach "emergency scene."

 

"Demonstrators" ignite gasoline bottles toward the bus.

 

Emergency mobile teams to participate in emergency disposal operations training team.

 

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Sun, 12/06/2015 - 22:06 | 6885720 Dragon HAwk
Dragon HAwk's picture

Which came first the training exercise or the actual Riot.. I am confused.  no need to train if they don't see it happening. that's all you need to know

Sun, 12/06/2015 - 22:29 | 6885837 Soul Glow
Soul Glow's picture

THEY SHOULD BE SWINGING OVER THE TOP OF THE SHIELDS.

 

Sun, 12/06/2015 - 22:09 | 6885729 LetThemEatRand
LetThemEatRand's picture

I wonder if this labor movement was also involved in a few explosions at Chinese plants recently.  Seems more probable than HAARP or CIA lasers.

 

Sun, 12/06/2015 - 22:12 | 6885744 yellowsub
yellowsub's picture

You can see it happening now with the munis buckling under their debt like Detroit and Chicago making public union workers angry with concessions... 

Sun, 12/06/2015 - 22:22 | 6885797 Omen IV
Omen IV's picture

Puerto Rico the canary in the coal mine - Bankruptcy Law coming for Muni's

Sun, 12/06/2015 - 22:47 | 6885915 willwork4food
willwork4food's picture

That's when you better not drink the water. The sanitation dudes might 'forget' to close a valve or two, and the water checkers might decide on a longer lunch break.

Sun, 12/06/2015 - 22:14 | 6885758 Vlad the Inhaler
Vlad the Inhaler's picture

Labor movement in China good for freedom, labor movement in America bad for economy, say American hypocrites.

Sun, 12/06/2015 - 22:34 | 6885858 LetThemEatRand
LetThemEatRand's picture

Wait for it.  The moment this goes mainstream, we'll hear daily about how the workers of China should be grateful for their assembly plant/living quarter safety nets.

Mon, 12/07/2015 - 01:01 | 6886408 Wild Theories
Wild Theories's picture

they should also be happy there are "independant" Chinese labor unions headed by guys with western names helping them out against the evil government, even when none of those labor disputes are against the government but are typically wage disputes against bankrupt factory owners

just like Syrians should be happy about the "Syrian" observatory of Human Rights being setup and funded in the UK by half a dozen guys, but since they got the "Syrian" title in their name nobody would question their legitimacy in representing the Syrian people

 

I mean, why does "Chinese labor bulletin" have Englishs-speaking spokespersons? how many memebers do their promoted "independant labor unions" actually represent? or are we just to take their word as fact since they said they are "independant" and their name says "China labor bulletin" they must be the authoritive voice on the subject?

and why is the English-speaking spokesperson not even Chinese himself?

Mon, 12/07/2015 - 02:28 | 6886603 LetThemEatRand
LetThemEatRand's picture

See?  There you go.  "Englishs-speaking" agitators, probably "progresssssivesss."  Certainly there could be no organic fight against the oligarch/state controlled nation of China.

Sun, 12/06/2015 - 22:17 | 6885771 CHoward
CHoward's picture

Due to their sheer numbers, the Chinese leadership has always been deathly afraid of insurrection - that really is their number one fear. 

Sun, 12/06/2015 - 22:18 | 6885782 Normalcy Bias
Normalcy Bias's picture

That's nothing that a large war can't solve...

Sun, 12/06/2015 - 22:49 | 6885923 r0mulus
r0mulus's picture

even if China lost a few hundred million, it would still be extremely, densely populated

they aren't gonna lose a few hundred million.

Mon, 12/07/2015 - 11:12 | 6887684 I AM SULLY
I AM SULLY's picture

China is heading towards civil war.

Sun, 12/06/2015 - 23:04 | 6885783 Francis Marx
Francis Marx's picture

Those people have nothing to loose thats while they will win.

Here they have welpfare and other things that acually hurt labor in the long run.

As people run to the state for help instead of organizing, their boss is giving their job away to Jehod john that just came in.

Sun, 12/06/2015 - 22:28 | 6885831 Soul Glow
Soul Glow's picture

BE HAPPY AND WORSHIP YOUR LEADERS!!!!!!

Sun, 12/06/2015 - 22:28 | 6885835 Yen Cross
Yen Cross's picture

 What is it with those Asian cultures?

  Pride, isn't always the best way to extraplanetary ideas.

Sun, 12/06/2015 - 22:30 | 6885839 Soul Glow
Soul Glow's picture

Gasoline bottles?  You mean molotoves.

Sun, 12/06/2015 - 23:21 | 6885866 Dr. Bonzo
Dr. Bonzo's picture

Reads like an Onion headline. Classic.

Korean chuntoo kyoungchal riot coppers also looked very shiny and geometric in training. The real thing was a whole different puppy however. Mostly units would break if heavily outnumbered and lot of the riot pigs would end up actually being held as prisoners, huddled in groups with their heads down, most sobbing and taking whatever haphazard beatings the occasional passing student would care to dish out. Good times. I don't expect these Chinese coppers to do much better. Then the party simply invokes the PLA put and everything's hunkydory and commie again.

Great place, China.....

 

LMFAO.

Sun, 12/06/2015 - 23:14 | 6886029 luna_man
luna_man's picture

 

 

Forget about it...Go back to your rice fields and be happy.

 

that'll teach em

Mon, 12/07/2015 - 00:58 | 6886426 CTG_Sweden
CTG_Sweden's picture

 

Perhaps the Chinese government should give all the stocks the government recently bought in order to prop up the stock market to the lower classes, or to pension funds for the lower classes.

China should probably also make additional efforts to replace imports with domestically produced goods instead of paying for imported aircraft with cheap junk that requires low paid labour. China can do that because their domestic economies of scale are magnificent. I suspect that it is possible to transform the Chinese economy faster.

Mon, 12/07/2015 - 07:31 | 6886922 HotelBread
HotelBread's picture

Follow-up question.

They've got ghost cities of literally millions of fancy condos sitting empty. Why not give them away by lottery?

Mon, 12/07/2015 - 11:17 | 6887687 CTG_Sweden
CTG_Sweden's picture

 

HotelBread:

 

"Follow-up question.

They've got ghost cities of literally millions of fancy condos sitting empty. Why not give them away by lottery?"

 

 

My comments:

Why not transform the economy faster so that more people can afford these fancy condos? In 1914, Henry Ford doubled wages to $5 a day. 95 years ago, Ford workers had almost the same purchasing power as a European doctor or lawyer. They could afford a car and a nice house. It shouldn´t be that difficult to increase the living standard for a country that has so great potential economies of scale and therefore shouldn´t depend on exporting cheap junk.

Furthermore, it´s easier to raise wages if you don´t produce cheap junk for the export markets but rather replace imports. More electric vehicles that reduce the need for imported oil is probably also a great idea. That reduces the need for exporting cheap junk and makes it easier to raise wages.

Mon, 12/07/2015 - 01:22 | 6886497 Yen Cross
Yen Cross's picture

  Leave it to the Chinese to wage Asphalt Sieges, with water canons.

 People can live a lot longer without food than they can without water.

Mon, 12/07/2015 - 01:49 | 6886559 Dre4dwolf
Dre4dwolf's picture

The irony that the workers protesting might be the same workers who made those cheap plastic riot shields lol

Mon, 12/07/2015 - 02:56 | 6886644 Flatchestynerdette
Flatchestynerdette's picture

@Dre4dwolf - if they make the cheap plastic riot shields like they make the screws for something  from the Container Store its going to be all over in a matter of a few hours. That's why they used tanks for Tiannamen Square - which was kinda dumb too unless the goal is going to be mass death but with 1.6 billion people maybe this IS the PRoC's way to meet its carbon targets it signed up for in Paris.

Gruesome but I don't see it coming to that.

I think its going to be mass deportations back to rural areas.

 

Mon, 12/07/2015 - 07:31 | 6886923 orangegeek
orangegeek's picture

I bet Soros is paying these demonstrators too.

 

Occupy Beijing Street.

Mon, 12/07/2015 - 09:32 | 6887162 I AM SULLY
I AM SULLY's picture

This goes out to those in China ... fighting for their dignity (what little they have).

http://iamsully.com/?p=15223

Mon, 12/07/2015 - 14:02 | 6888627 SweetDoug
SweetDoug's picture




Chinese workers protesting against working conditions in their communist country.

Might want to think that ‘we’re all equal’ communist thing.

Mao must be rolling in his grave!

I have lived long enough to see it all!

Sit back and enjoy!

What is China going to do with millions of drunken, horny, single, unemployed men (certainly when automation begins in a few years)?

Kill them.

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