China’s Slowing Economy Offers Slightest Glimmer Of Social Unrest

CHINA’S GDP GROWTH for 2014 came in at 7.4%. That is about as close to the fudgy official target of ‘about 7.5%’ as you can get. Props to accelerated infrastructure projects for that, giving construction output a late boost. Fourth-quarter GDP growth, at 7.3% year-on-year, beat expectations by 0.1 of a percentage point.

Further deceleration towards 7% growth seems likely this year as the double-digit growth rates of the past 30 years recede into the past. Slowing growth as the economy rebalances is the ‘new normal,’ a phrase much bandied about in public of late by senior officials.

As this Bystander has noted before, it was not so long ago that growth slowing to 8% was said to be a harbinger of social unrest because of the pressure it would place on employment. That is nowhere to be seen in the official unemployment numbers. These have steadfastly performed their patriotic duty by staying within a narrow band, 4.0%-4.3%, for more than a decade, and have been immovable at 4.1% for the past five years. Unpublished official unemployment numbers put last year’s rate at 5.1%, according to the Financial Times. An EIU-IMF-ILO estimate had the number at 6.3%.

The critical political question is what is the number, if any, that triggers the much-feared labour unrest. While demographic and structural changes to the economy are relieving some of the pressure on unemployment, there are straws in the wind that the economic slowdown is starting to have an effect at the margins on labour activism.

The China Labour Bulletin (CLB), a Hong Kong-based NGO that advocates for workers’ rights, recorded 569 strikes and protests by workers in the fourth quarter, more than three times as many as in the same quarter year earlier. That said, even allowing for the constraints Chinese workers find themselves under, that is not a huge total for a workforce approaching three-quarters of a billion strong.

Pay arrears, wage increases and compensation were behind almost nine out of ten of the incidents. The CLB’s strike map shows southern Guangdong province to remain the epicenter of labour dissatisfaction, accounting for one in five incidents. However, Jiangsu, Shandong, and Henan all saw a jump in strikes and protests last year, according to the CLB’s count.

Manufacturing accounted for 36% of incidents, but last year saw a jump in protests among construction workers. They accounted for 31% of the total in 2014, likely a consequence of the slump in the property market which has left uncompleted projects and unpaid workers along with them. Mining also saw a rise in protests. The industry has consolidated, and demand for its output  sagged.

One notable new set of protestors were teachers, angry at pension reforms proposed last year that would require them to pay contributions equivalent to 12% of their salary. This month, authorities said wages and pensions of public-sector employees would rise to offset any losses caused by the plan.

Other responses to labour activism have taken a harder line with both workers and the NGOs supporting them. In one instance last month in Shenzhen, paramilitary police were sent into the Artigas Clothing & Leatherwear factory to strike break. Such actions suggest there is just a glimmer of official concern at the social consequences of the slowing of the economy, though much will turn on the pace at which it happens.

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