China Is a Ticking Time Bomb Of Labor Unrest

6/20/2011 8:30 PM ET

By Jim Jubak

The fast-growing economy is fueled by low-paid migrant workers who have watched others profit from their sweat. How much longer will they be willing to do it?

On June 19, in Athens, 8,000 people protested the government's plan to raise taxes, cut public sector jobs and sell off state assets. The city's Syntagma Square has become a permanent tent city, with a steady diet of protest speeches, street theater and music. Employees at the country's electric power plants will begin rolling 48-hour strikes next week. Unions are planning a 48-hour general strike to coincide with a vote in Parliament on a new austerity package.

Meanwhile in China, the anniversary of the June 4 attack by Chinese army units against demonstrators in Beijing's Tiananmen Square has passed without coordinated large-scale protests. Somewhere between several hundred and several thousand protesters were killed in 1989 when the army moved in, firing live ammunition at the crowd. The events in the capital kicked off a massive crackdown on protests outside the capital city and a purge of any party official who had even hinted at support for the protesters' demands.

Latest on Chinese economy

The lack of a coordinated, large-scale protest, however, doesn't mean that China has been peaceful. The country is seeing an increase in uncoordinated protests over seemingly local problems. Last week a protest against lead poisoning in Zhejiang province resulted in one of the largest group petitions for redress this year. Three days of riots in Zengcheng broke out after a pregnant migrant worker was roughed up by government security guards trying to stop her from selling goods outside a supermarket. Elsewhere in Guangdong, a stabbing of a worker at a ceramics factory, allegedly ordered by his boss after the worker asked for unpaid wages, prompted clashes between workers and police. On June 12, a man set off a bomb outside a local government headquarters in Tianjin. That followed hard on the heels of three explosions in Fuzhou "protesting" the illegal removal of a building in 2002.

Jim Jubak

The most recent figures on what China calls "mass incidents," a category that includes petitions, demonstrations and strikes, date from 2010. It shows mass incidents hitting 180,000 in 2010, up from 87,000 in 2005, according to the Ministry of Public Security.

These incidents are only seemingly local, however. There may not be anything coordinated about this, and the scale may be small for China -- 600 workers here, 800 protesters there -- but Beijing has a national problem nonetheless. The same festering social problem underlies most of these protests, and it's not going away.

I'm talking about the anger of the 150 million to 240 million migrant workers who have helped fuel China's extraordinary growth with their cheap labor but who have not shared in the country's new wealth. I think it's safe to say that China's leaders are facing the most serious challenge yet to the mix of economic and political policies that has fueled the country's dynamic growth over the past three decades.

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The root of the problem is China's hukou system of household registration. Migrant workers aren't considered residents of the cities where they live, which means they aren't entitled to health care, pensions, housing subsidies or education for their children. To educate their children, migrant workers either have to find the money to pay for schooling in the cities where they work or send their children back to the rural areas where they officially still live. With migrant workers earning so little -- the average is about $250 a month -- sending children back home is often the only option.

The hukou system is nothing new, so why the increase in protests now? Three reasons, I think. First, the contrast between the country's newly wealthy and this vast migrant underclass has fed anger at the unfairness of the system. Second, because China's growth has produced labor shortages in many parts of eastern, export-oriented China and because Beijing has pushed growth into lagging western provinces, migrant workers have more bargaining power. They can find work closer to home if they don't like the way they're treated in the traditional fast-growth provinces. Third, China's increasing inflation rate has come down particularly hard on the country's poorest residents. The annual overall inflation rate was 5.5% in May, but food inflation is running at well over 10% annually. If you make just $250 a month -- and remember that's the average, so some migrant workers make even less -- and spend 35% of your family budget on food, then 10% food inflation is pinning you to the wall.

Beijing knows it has a problem. A government report from the Development Research Center of the State Council, republished last week, warns that if migrant workers "are not absorbed into urban society and do not enjoy the rights they're entitled to, many conflicts will accumulate." The report projects that 9 million additional migrant workers will join the urban workforce each year between now and 2015.

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Good!  I hope the people of China rise up against the slavery we in the US and all other industrialized worlds have caused.  It is unsustainable growth to have the Chinese people not accelerate to middle class incomes to produce demand to in turn purchase production from us, and they most certainly should be demanding better wages, benefits, safety, and voice in their work environments and their government. 

These poor people have been exploited enough!  And it is time for our wonderfully ridiculous excuse of globalization to become an actual fair trade to where all nations will benefit.  That was the original point of trade. 

So far, this trade has caused destruction on both fronts: China has been exploiting labor in worker camps with negligible increase in consumer wealth and demand.  While US and other nations have suffered massive unemployment due to the inability to compete with effective slave labor.  All reducing demand and eventually supply will crumble.  Prices never decreased, nor does the Fed or businesses want to see deflation that would required to make such a trade structure stable as this would increase unemployment even more causing even more destruction to demand ergo eventually even supply.  Current system of “globalization” is completely unsustainable economically and completely immoral socially. When you have both economics and sociology coming to the same negative conclusion— it’s hard to argue it’s not a fact.

    2    3ReportSpamdrink moosehead4 hours agothey need more inflation, just like this country needs.     0    2ReportSpamFrank Morton  (Starlight19) 5 hours ago

China has a proud and long history. Her people are bright and well educated. It's just a matter of time until the factories they were exploited in are taken. I hope I live to see it. Our traitorous pigs in banking, wall street and big corporations who deserted their own country for slave labor will come down. There will be no place in the world for them too hide. I do not believe we will last long without a major depression if we don't come against these same evil and greed driven pigs.

   Our middle class is being destroyed, poverty is growing and 1 or 2% take more and more. Our government and media are big money dominated and they have millions of people working against their own best interest. This is a sure formula for disaster.

    10    2ReportSpamEndurance Racer6 hours agoChina's "ticking time bomb" really doesn't matter because of all the people in India, ready and willing to take their place...     2    0ReportSpamGRAFFITTI6 hours agoA few years ago roughly 6-8, a man I met who was from China and does importing from China said, the Chinese economy is built on false data and it will show up,  also there would be civil unrest to follow. I believe we are beginning to see the cracks .     4    2ReportSpamIrishbloody6 hours agowhat is this Jim?  What is happening to your sharpness'? This article doesn't belong here!     3    0ReportSpamWakeUpNow078 hours agoHmmmm another of these "experts' trying to scare the markets lower ---- I wonder what this means --- time to buy perhaps?     7    8ReportSpamjoey7218 hours ago

change856 - and yet where would you be without the low priced toys you and others like to buy? Outsourced jobs won't be coming back unless the cost to manufacture here in the US is less than overseas.

China is projected to have the largest economy by 2020 and India will be number 2 by 2030. The population (market size) will determine  the rankings. We either learn how to compete and export to these growing markets, or we continue our decline.

    8    3ReportSpamChange8569 hours ago

Wake up people, The biggest ticking bomb is the  US economy and not China. We exported all our manufacturing jobs overseas, giving to the greed of Fortune 500, that will provide cheap goods by exporting Jobs and out sourcing. We have not seen any decrease in prices last 20 years. What we have seen coffers of these large corporations and CEO's filling their bank accounts, taking subsidies by  telling the government that we are trying to save jobs in this country. China at this point does not have a large deficit like us and they will still be able to survive because they have a manufacturing base which we don't .. So lets bring these jobs back to America. Be American Buy American, support our country and our people and prosperity back to this country, not making China and India RICH.

    27    3ReportSpamLostOnEarth9 hours agoThe poor are just expendable slave labor to the rich. Worldwide Revolution Now!     13    8ReportSpamBull Rider9 hours agoNot to worry. The Chinese have many many bullets and guns in which to shoot down any protest aimed towards the ruling class.But just in case, Dear China, Please ship my order of RC helicopter parts asap before workers riot in the streets and burn down Walkera RC Heli factory. Thank you.http://youtu.be/L8K9​2OZBVagSigned,Bull Rider      10    12ReportSpamAdd a commentReportPlease help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. 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The root of the problem is China's hukou system of household registration. Migrant workers aren't considered residents of the cities where they live, which means they aren't entitled to health care, pensions, housing subsidies or education for their children. To educate their children, migrant workers either have to find the money to pay for schooling in the cities where they work or send their children back to the rural areas where they officially still live. With migrant workers earning so little -- the average is about $250 a month -- sending children back home is often the only option.

The hukou system is nothing new, so why the increase in protests now? Three reasons, I think. First, the contrast between the country's newly wealthy and this vast migrant underclass has fed anger at the unfairness of the system. Second, because China's growth has produced labor shortages in many parts of eastern, export-oriented China and because Beijing has pushed growth into lagging western provinces, migrant workers have more bargaining power. They can find work closer to home if they don't like the way they're treated in the traditional fast-growth provinces. Third, China's increasing inflation rate has come down particularly hard on the country's poorest residents. The annual overall inflation rate was 5.5% in May, but food inflation is running at well over 10% annually. If you make just $250 a month -- and remember that's the average, so some migrant workers make even less -- and spend 35% of your family budget on food, then 10% food inflation is pinning you to the wall.

Beijing knows it has a problem. A government report from the Development Research Center of the State Council, republished last week, warns that if migrant workers "are not absorbed into urban society and do not enjoy the rights they're entitled to, many conflicts will accumulate." The report projects that 9 million additional migrant workers will join the urban workforce each year between now and 2015.

Good!  I hope the people of China rise up against the slavery we in the US and all other industrialized worlds have caused.  It is unsustainable growth to have the Chinese people not accelerate to middle class incomes to produce demand to in turn purchase production from us, and they most certainly should be demanding better wages, benefits, safety, and voice in their work environments and their government. 

These poor people have been exploited enough!  And it is time for our wonderfully ridiculous excuse of globalization to become an actual fair trade to where all nations will benefit.  That was the original point of trade. 

So far, this trade has caused destruction on both fronts: China has been exploiting labor in worker camps with negligible increase in consumer wealth and demand.  While US and other nations have suffered massive unemployment due to the inability to compete with effective slave labor.  All reducing demand and eventually supply will crumble.  Prices never decreased, nor does the Fed or businesses want to see deflation that would required to make such a trade structure stable as this would increase unemployment even more causing even more destruction to demand ergo eventually even supply.  Current system of “globalization” is completely unsustainable economically and completely immoral socially. When you have both economics and sociology coming to the same negative conclusion— it’s hard to argue it’s not a fact.

China has a proud and long history. Her people are bright and well educated. It's just a matter of time until the factories they were exploited in are taken. I hope I live to see it. Our traitorous pigs in banking, wall street and big corporations who deserted their own country for slave labor will come down. There will be no place in the world for them too hide. I do not believe we will last long without a major depression if we don't come against these same evil and greed driven pigs.

   Our middle class is being destroyed, poverty is growing and 1 or 2% take more and more. Our government and media are big money dominated and they have millions of people working against their own best interest. This is a sure formula for disaster.

change856 - and yet where would you be without the low priced toys you and others like to buy? Outsourced jobs won't be coming back unless the cost to manufacture here in the US is less than overseas.

China is projected to have the largest economy by 2020 and India will be number 2 by 2030. The population (market size) will determine  the rankings. We either learn how to compete and export to these growing markets, or we continue our decline.

Wake up people, The biggest ticking bomb is the  US economy and not China. We exported all our manufacturing jobs overseas, giving to the greed of Fortune 500, that will provide cheap goods by exporting Jobs and out sourcing. We have not seen any decrease in prices last 20 years. What we have seen coffers of these large corporations and CEO's filling their bank accounts, taking subsidies by  telling the government that we are trying to save jobs in this country. China at this point does not have a large deficit like us and they will still be able to survive because they have a manufacturing base which we don't .. So lets bring these jobs back to America. Be American Buy American, support our country and our people and prosperity back to this country, not making China and India RICH.

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