Taking the Bosses Hostage

Joshua Kurlantzick

Factory Girls: Voices from the Heart of Modern China by Leslie Chang
Picador, 432 pp, £12.99, February 2009, ISBN 978 0 330 50670 0
Capitalism with Chinese Characteristics: Entrepreneurship and the State by Yasheng Huang
Cambridge, 366 pp, £15.99, November 2008, ISBN 978 0 521 89810 2

The riot started, last December, in the wake of a simple pay dispute at a small Chinese factory that manufactured cheap suitcases. Orders had been dropping, and the factory closed down without warning, leaving wages unpaid. The workers started to smash up the factory, and looked for managers to attack. The police arrived on the scene, and attempted to restrain the workers by locking them inside the factory compound while the managers offered them a deal – part of their back wages would be paid if they left town. This strategy failed; according to an account in the Washington Post, more than a hundred workers fought their way past the police, scuffling with the security forces and chanting: ‘There are no human rights here!’

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Vol. 31 No. 6 · 26 March 2009 » Joshua Kurlantzick » Taking the Bosses Hostage (print version)
Pages 9-13 | 3803 words

Letters

From Kerry Brown

Joshua Kurlantzick isn’t quite right when he says in his review of Yasheng Huang and Leslie Chang’s books on China that the Chinese middle classes aren’t willing to spend (LRB, 26 March). Surprisingly, data for late last year and early this year, including the crucial Spring Festival period in late January and early February, show that consumers in China spent over 20 per cent more than in the same period a year earlier. This despite the fact that according to every other indicator (exports, unemployment, growth rates), China was heading into recession with the rest of the world. The problem is that, spend as much as they might, the Chinese middle classes cannot, on their own, plug the gap left by disappearing export markets. This reliance on exports is something the Chinese government foresaw: but like everyone else, it has been taken aback by the sheer speed with which the global economy has deteriorated. They had a plan B, and have put it into action; but they really needed a Plan C, which would tell them what to do when their export markets abroad disappeared not in a matter of years, but in just a few months.

Kurlantzick mentions the figure of 20 million unemployed in China this year. This isn’t as terrifying as he implies. In the late 1990s, during the period of state-owned enterprise reform (a period Huang himself in his book refers to with some contempt as showing the victory of pro-urban, anti-rural growth), China lost a staggering 60 million jobs. That set a benchmark that leaves it well prepared for what might be happening now. And the fabled 8 per cent growth rate he refers to will certainly be achieved by the Chinese economy this year, which is why China has been so confident in proclaiming it. Unlike other economies, China calculates this growth taking the massive $600 billion stimulus package into account, and so with that alone, it is almost at its target. One thing that is particularly disturbing about the impact of the global recession in China is how far it will knock back the government from its long-term targets. From now on, short-term economic growth will reign supreme – the government will almost certainly be able to fix the short-term problems: stimulate spending, create jobs and manage any unrest – but longer-term targets of any sort (of which energy efficiency, environmental and political reform are the most striking) will be kicked into the distant future.

Kerry Brown
Chatham House, London SW1