"Don't Take The Public For Fools!": China Hides Millions Of Layoffs, Jails Miners Protesting Unpaid Wages
When you look out across markets and across the increasingly fraught geopolitical landscape, there are plenty of black swans waiting in the wings (no pun intended). And quite a few of them are Chinese.
China has, among other problems: a massive debt overhang that, all told, amounts to more than 250% of GDP; a decelerating economy that Beijing swears will be able to pull off a miracle and move away from the smokestack and away from export-led growth without slipping into recession; a currency crisis; a new property bubble in Tier-1 cities; and a burgeoning NPL problem in the banking sector.
All of those issues are of course inextricably bound up with one another. They are set like dominoes and once the first one tips, the rest will too as sure as night follows day.
And while twin crises (financial and economic) in China would wreak havoc on markets in both EM and DM - between which China exists in a sort of limbo - the real question is this: what would the consequences be for societal stability in China? That is, if it all falls down, will social upheaval ensue leading to a revolt against the Politburo?
That’s not some attempt to use hyperbole on the way to positing some anarchic future for the world’s engine of global growth and trade. In fact, the possibility for widespread unrest is so real that Chinese officials have begun to address it frequently in discussions of how they plan to deal with the mass layoffs that are bound to result from Beijing’s efforts to restructure the country’s collection of elephantine SOEs and stamp out excess capacity.
After Li Xinchuang, head of China Metallurgical Industry Planning and Research Institute told Xinhua that eliminating excess capacity in the steel industry will cost 400,000 jobs and could fuel “social instability”, the government went into spin mode. National Development and Reform Commission Chairman Xu Shaoshi said in February that Beijing's attempts to curb overcapacity will increase unemployment in provinces with high output of steel and coal but will not cause social unrest. Similarly, Xiao Yaqing, who oversees the government commission that looks after state assets, said last week that the country won’t experience a wave of layoffs as a result of SOE restructuring.
But the cracks are already starting to show.
As we reported on Monday, thousands of miners in China's coal-rich (or poor depending on one's perspective) north have gone on strike over months of unpaid wages and fears that government calls to restructure their state-owned employer will lead to mass layoffs. As AFP noted, protesters were marching through the streets of Shuangyashan city in Heilongjiang province, venting their frustration at Longmay Mining Holding Group, the biggest coal firm in northeast China.
Speaking of Longmay, the company is laying off 100,000 workers and in a sign of things to come, around a quarter of them have been reassigned to the agriculture, timber and public service industries.
While that's good news for the unemployment rate, it's bad news for workers. Why? Because those jobs pay around a third (or less) of what mining jobs pay.
"(Changing professions) is not easy," a miner who left Longmay last year told Reuters. "All those who are changing professions went to work in sanitation or logging," for less money, he added. Here's more:
The government has earmarked 100 billion yuan ($15 billion) for relocating and retraining state workers over two years, but with up to 6 million coal and steel jobs to be axed those funds could be spread very thin.
Workers laid off from inefficient state-owned coal and steel firms will join those made redundant at private firms in struggling sectors like textiles and apparel, which are shedding an estimated 400,000 employees a year.
That risks creating a cohort of middle-aged blue-collar workers with bleak prospects in an economy growing at its slowest rate in decades.
Slower economic growth means it will be harder to absorb redundant workers. Local governments in distressed regions like the northeast lack the capacity to do much more than hand them a mop or a shovel. Where workers do manage to secure new jobs, many are likely to find themselves demoted, earning less and with bleak career prospects.
"The most likely result from future industrial layoffs is not a sharp increase in unemployment, but a further deceleration in household income growth," Cui Ernan, labor analyst at Gavekal Dragonomics in Beijing, wrote in a research note.
And that means you can kiss the dream of a successful transition to a consumption and services-led economy goodbye. Or, as we put it exactly a week ago: It would be a small (actually scratch that, a "very large") miracle if Beijing is able to restructure the economy's collection of elephantine SOEs without creating an employment crisis. And if, as Zhou says, China intends to depend on domestic consumption rather than exports to fuel growth, then the PBoC had better get to explaining how exactly it is that hundreds of thousands of recently jobless factory workers are going to be able to be power the hoped-for but still nascent transformation.
"The average annual wage in mining in 2014 was 61,677 yuan ($9,542), compared with 28,356 yuan in farming and forestry, according to official data. Textile workers moving to restaurant and retail jobs can expect to earn around 37,264 yuan, a drop from the 51,369 yuan average pay in manufacturing," Reuters continues. "In Shuangyashan and nearby Hegang, the consumption-driven economy looks a distant goal."
Clearly, handing someone a mop and a 66% pay cut isn't going to be a viable solution for the millions upon millions who are about to be jobless in China. And we don't just mean "viable" in terms of the read through for China's hoped-for transition away from investment-led growth. We mean "viable" in terms of fending off a popular revolt.
But if the masses do rise up, don't expect the Politburo to go down without a fight. In fact, Beijing is already taking steps to discourage public displays of disaffection. On Wednesday, in the country's southwest, eight construction workers tied to a protest held in Langzhong last August were subjected to a 1950's-style public sentencing. Their crime: protesting unpaid wages. Their charge: obstructing official business. The verdict: guilty.
"Many Chinese recoiled from the humiliation of pitiable migrant workers in a much-reviled and largely disused judicial practice," WSJ wrote, earlier this week. "Legal experts, journalists and laymen alike launched into caustic criticism of the Langzhong court, calling its rally barbaric and an egregious violation of due process."
Right. And that's the whole point. Because if you give angry workers the idea that they can protest without suffering severe consequences, well then you might just have yourself a whole lot of protests once the layoffs begin in earnest. The workers shown flanked by police below will be spending the next six to eight months in jail.
Of course when people can't feed their families they stop worrying about public shaming and even forget about the threat of prison. Which is why China will ultimately be unable to contain the public's collective anger when the proverbial rubber hits the road.
The local government said the public sentencing was an effort to "to educate the public on how to lawfully protect their rights."
The response from one Weibo user: "Don’t take the public for fools. You think the people don’t understand your purpose in using public sentencing?"
The Party had better figure something out quick. Because while you can make an example out of a handful of construction workers, and while you can "disappear" dissident journalists, the only thing you can do when millions of furious Chinese descend on Zhongnanhai is start shooting.
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Sum ting wong?
Naaaa. No prawbram.
Roundeye say we have exproding ecronome.
That's right Charlie.
EBT, porblem is solved.
Wayge tu lo
“We’re going to put a lot of coal miners and coal companies out of business,” Clinton said Sunday night while boasting about her clean energy program — and with a big smile on her face.
In fact, this is standard Democratic policy: President Obama’s been throwing coal miners out of work for seven years now, aiming to deliver on his 2008 pledge to “bankrupt” the coal industry.
"Change you can believe in"...Hillery style!
Why so complex? Must needs modernize with BLS method.
Once they start shooting it will probably end up like the Russian 1917 revolution where the army deserts.
Revolt, my Asian brothers!
You can be free of the yoke of state and be just like us in the West: Tyranny Free.
Coal has been going the way of the horse and buggy for quite a while. Mostly because energy companies don't want to pay the high cost of scrubbers.
All those laid off coal miners are your new Obama Care Facilitators.
The Chinese aren't people that expect handout's. There will be restructuring and job losses. The average man on the street will go out and find other work or go back to being farmer's or whatever else they used to do. They won't sit there complaining why the government owes them a livlihood.
Indeed.
Of course the democrats are talking about higher minimum wages...
can someone remind me precisely how unpaid or lower wages that are priced in Yuan gives that currency more "credibility"?
More globally, I don't see any upward pressure on wages anywhere. Except for perhaps the private security industry.
Am I off base here? What am I missing?
no matter what eyes you got, they will be plagued by greed and corruption in complacent times. humans seem to like cycling through complacentcy and fear. fear will be here not too much longer after the seven year QE high we have been on. the come down will be a bitch as the CB clinic is out of methadone.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.wallstreet34.com
Welcome to the Rothchilds New World Order!
President Xi Jinping sucks cock.
Don't knock it, it's a paying job.
I read online he is pulling China back so much they call him The Second Chairman Meow.
He did good job curbing corruption, but his belief in the Keynesinism will make China follow Brasil.
Keynesianism does not prevent crysis, it poisons growth.
lol curbing corruption, that was a good joke.
Free Obama phone, free health care, free housing, good stamps when you get laid off here in the US. But we also rig the unemployment numbers
Don't forget taking in billions upon billions of Muzzie teruderusts dressed as refugees. That'd solve a whole lotta shit, too!
Just ask a European!
I keep looking for that "free" healthcare but never find it.
Five million peeps in the armed forces may not be disobeyed.
Everyone else - little peeps.
They are running behind on that big ass war . That's how these things get solved per history
They talk of "millions and millions" of people. Reality is that's a drop in the bucket compared to a population of 1.4 billion.
It's the equivalent of saying that a few hundred thousand people in the US will be losing their jobs becasue of restructuring. Significant? Yes. Catastrophic? No.
Catastrophic .... the buzzing of a trillion mosquitoes .... humming the "Ode To A Silent Spring" .... by Rachel Carson .... or the rat tat tat of Obama's "Arab Spring" ?
It is really tens upon millions of peopleand for China it is already a BIG problem.
Nobody can acquire wealth .... fuck over the workers and student protesters .... run unsafe mines .... like some greedy communists do .... there's some irony .... for your ironing boards, Bitchez ?
<--- Send in the Army
<--- Pinkertons are people too
<--- Save the rust belt
<--- Save money by not paying the labor force
<--- Great Leap Forward
<--- Factory feudalism
<--- Holiday In Cambodia
<--- Halloween
No matter what the percentage of population is, or if the government is acting bruatlly, this is evidence that China is facing a massive slowdown.
China is the "engine of growth" and the train is stopping in its tracks.
As CBs go the the bottom of the barrel to find something to prop up the unpropable. What then?
The snake eats its tail.
Speaking as a central planner, the bright side of this is that stopped trains don't cause train wrecks. Right?
No, only rifle shots that knock out the engineer cause train wrecks, even if the engineer blows the speed limit on a sharp curve.
China only sloweed down compared to itself. But It is still one of the fastest growing economy in the world compared to other countries.
All workers can be short sited. They focus on checks and oblivious of the supply/demand, something strikes won't/can't cure. Like auto workers who continued to make and flood junk/cheap cars to into the markets thinking it was endless, or real estate agents in the housing bust. It is time for the working class to up their awareness of things that can impact their livelyhoods and stop working and living blindly in this changing era. Strikes need to happen before the fall (like, we gotta stop making this cheap shit, so much of this shit), not afterward.
What would they be striking for?
Labor management that includes their interest for the long haul, changes to production levels, improved products, shifts to other products, and if necessary calculated adjustments to work hours. Not just run full blast until it falls apart. Then, what do you strike for? Better to say "we are going to shut down your production before you shut down ours"
China would replace the labor with cheaper workers.
Machines.
We goalseekeded some folks.
xi-"anymore rip out of you and we ret roose the tanks"
No protests for you!
... and it's off to the labor camp for you!