How Do You Get The Chinese Back on The Farm..Now That They’ve Seen Broadway?

It’s time, my friends (as John McCain is wont to say), to cue up that famous theme of the world economy, “It’s a Small, Small World” – if anyone thinks we are not all interconnected, like some giant bamboo forest, where if one of us gets sick, we all get sick — well, you are mistaken, my friend. Where, when one of us hitches their economic wagon to OUR star..and our star not only falls but gets sucked under the ground, that the hitchees’ wagons are going to fall also…Exhibit A: China.

"Mr. Hu and other Chinese leaders are now facing a new era in which Deng’s export-led economic model, as well as his iron-fisted political control, face unprecedented challenges. Global demand for Chinese goods has slumped, unrest is on the rise in the industrial heartland, and China is scrambling for a new formula to preserve stability and ensure growth….Instead, leaders are restoring tax breaks for exporters and pushing down the value of China’s currency to encourage exports. At the same time, they are casting about for ways to spur domestic demand and wean China’s economy off its dependence on foreign markets swept up in the global financial crisis…As yet, gauging the scale of factory closings remains difficult in Shenzhen and surrounding Guangdong Province, the country’s main export engine. .. But the recent export slowdown is having an unanticipated impact. More than 7,000 small- and medium-sized factories have closed in recent months. Shenzhen’s mayor said 50,000 people in the city alone had lost their jobs in the last few months…State media have reported that 4.85 million migrant workers have returned to the countryside early before next month’s annual Lunar New Year holiday. Some inland provinces have already announced subsidies for unemployed returnees. On Thursday, the country’s official news agency, Xinhua, reported that 6.5 million migrant workers may be jobless next year."

China’s Engine Stumbles

And, Republic Window and Door workers will be thankful that they staged their protest in Chicago..rather than in Dongguan, China…

“Police held hundreds of protesting workers inside a suitcase factory in southern China to prevent them from staging a public demonstration about a wage dispute Friday, a worker said from the compound…The standoff at the Jianrong Suitcase Factory in the southern city of Dongguan is the latest unrest arising from layoffs, poor working conditions and slashed wages in China, where thousands of companies have gone bust in recent months.…Zhang said the suitcase company had ceased operations Dec. 15, and some workers had not been paid for 2 1/2 months. Those who had not been paid had been told to expect only 60 percent of their salaries, while those who had been paid would have to return 40 percent of what they received, he said..Zhang said his monthly salary was 2,000 yuan ($290), while other workers at the factory earned half that amount…The local government Friday offered to pay 60 percent of their wages for the final month of work, but the workers rejected it.”
Police Holding Factory Workers

Let’s think about this just a little bit: Millions of low paid workers having to go home to the countryside because their factories are shut down. Nothing to do and no place to go but home, where there are no jobs for them either. There have already been hundreds of riots and protests in the countryside because of the perception that the government’s attention and benefits are going to factories and factory workers in the coastal economic regions. And now those people are having to go home. At the same time, government police are basically holding workers in factories for protesting?

As I have written here before, the number 1 job of the Chinese government..any Chinese government…is controlling the millions upon millions of people that must be housed, clothed, fed and occupied. They threw their efforts behind producing a manufacturing engine second to none ..first for the world and they hoped to produce enough individual discretionary income to produce a US-style consumerist society. At that point, they could decouple from countries such as the United States(which for us would have carried its own risks and problems). Unfortunately, they’ve run out of time. There are 219 million working age adults in China – this is a huge workforce. Unrest in the economic regions at the coast and in the countryside is not something the Chinese government can afford right now. I am sure they are watching the auto bailout and other economic stabilization efforts here in the US very carefully – the only question is: With family level economics still being sucked down the sewer of layoffs, mortgage and other loan repossessions and pessimism, will American’s open their wallets in time that orders will flow and China’s factories can call back their workers? Or is it a case of “Now that they’ve seen Broadway, they’ll go home and set fire to the countryside?”