Saturday, November 22, 2008

Credit crunch brings unrest to China

China may be seen us a fast developing economy but the global financial crisis is starting to see an impact as factories shut and export orders dry up. There have been protests seen outside several factories in the last few weeks and there are fears that if financial instability continues there will be a rise in such disturbances and riots [CNN].

About 2,000 people rioted on Monday in the north-western province of Gansu over plans to move Longnan's city government offices, which were damaged in the May 12 Sichuan earthquake, to a nearby county. Residents, fearing the change would reduce their property values and threaten their livelihoods, clashed with police and looted government offices, the Gansu Daily reported [BBC]. The paper also reported a strike by several hundred taxi drivers who were protesting a decision to put more taxis on the roads in Chongqing, south-west China. The drivers fear the proposal will increase competition and reduce their profits.

These reports reflect the growing anger felt by ordinary workers across the vast continent. And the situation may well worsen. More than 65,000 Chinese factories have gone bankrupt this year alone and although unemployment is said to be only around 4%, less than the government’s own projected figures, the picture is bleak [BBC].

On Thursday, the BBC showed pictures of a lone police officer being surrounded by an angry group of factory workers who had not been paid. It is a scene repeated across the country as hundreds lose their only livelihood. Over 700,000 were laid off in Shandong in northern China this year and in the southern province of Guangdong hundreds of firms have closed. The forced redundancies has made the government implement new rules making companies seek permission before laying off staff [BBC]. But even those who keep their jobs are seeing huge cuts in both their work hours and wages.

Chairman Mao talked of the importance of China’s self-reliance. But with China opening up to the world it has also become vulnerable to the effects of a global economy; an economy which is not working very well right now.
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