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 Unpublished official unemployment numbers put last year’s rate at 5.1%, according to the Financial Times.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.

Social Management In Wukan And Beyond

In defusing the Wukan protest, the Party has taken the high ground of beneficent paternalism, just as it did after violent protests by migrant workers in Guangdong in July. This is becoming a standard method for containing and defusing social unrest, though it risks promoting by example the idea that, for the aggrieved, escalating a protest works.

In the Wukan land-grab case, blame has been laid squarely on the shoulders of local officials. They are accused of incompetence, not corruption, mishandling a legitimate grievance thus letting it escalate into a ‘mass incident’. Detainees are being released. An autopsy will be conducted into the death in police detention of a village leader ; the original contentious land deal will be investigated. A police blockade of Wuhan has been lifted while villagers have dismantled their makeshift barricades. State media praised high-level Guangdong officials for resolving the matter and reminded all lower level local ones that they need to “grasp the interest and demands of the masses”. The subtext: we don’t want to see any repeats of this sort of challenge to Party rule; get them sorted before they blow up.

Zhou Yongkang, the Politburo member who was once China’s top policeman, has repeated the message, but with a rider to remind the masses who carries the big stick. At a conference on political and legal issues in Beijing this week he told authorities to “crack down on crimes and violence against national unity in order to maintain national safety and stability”.

The spotlight of world attention that the Wukan protesters were able to occupy gave them a deal of protection against being cracked down upon. A parallel protest in Haimen, over alleged police violence and the environmental damage caused by a local power station along the coast from Wukan, is struggling to do the same. Tear gas was fired at protesters there a day after thousands of locals closed a highway and clashed with armed police.

Authorities have proven ways of managing isolated protests over local abuses of power, which are increasingly common–230,000 a year now on some estimates–and sometimes violent. Beyond riot policing with a heavy hand and rapid deployment, they try to keep them localized and grievence-specific. Beijing’s fear is that social unrest coalesces across social classes into a broader movement that threatens the Party’s rule, as in 1989. Many protestors understand the rules, appealing, as in the Wukan and Haimen cases, over the heads of local officials to higher-levels of government, explicitly not questioning the legitimacy of the Party as such.

That does not make the Party’s concern about social unrest as a byproduct of economic development any less acute. This year, for the first time, China has spent more on public security than on its military. Police stations are being modernized, personnel trained and equipped with state-of-the-art technology, such as Harbin police’s new armed anti-personnel carriers.

What Beijing doesn’t want is local officials undermining its social management, for reasons of either greed or incompetence. At their national annual meeting this week, the country’s prosecutors said that between January and November they investigated 2,475 government officials at county level or above for abuses of power. Their priority targets for next year are crimes related to the abuse of power by officials, dereliction of duty and work-related crimes in major accidents, bribery in local elections, the practice of buying and selling official posts and protecting mafia-style gangs. No protest from the villagers of Wukan about any of that.

Catch 22 At Wukan

The Party has a thin line to walk in dealing with the outbreak of social unrest in Wukan, the Guangdong fishing village that has been in revolt since September over allegedly illegal land acquisitions by local officials. Authorities are laying siege to the rebellious village — a coastal fishing community of some 20,000 people within Shanwei township some 150 kilometers northwest of Hong Kong– following further demonstrations after the death this week of one of the protestors’ leaders, Xue Jinbo, in disputed circumstances while in police detention.

With no food or fuel being allowed into Wukan and their fishing fleet blockaded, villagers say they have supplies to hold out for 10 days. Internet connections have been severed and the electricity supply reportedly threatened to be cut off.

An attempt by armed police to reenter the village last weekend was rebuffed. With foreign reporters in the village and the protests gaining worldwide attention, regardless of internal censorship of the events, authorities cannot readily storm the village to retake it by overwhelming force. Instead they are trying carrot and stick: a promise of an investigation into the land transactions and the removal of a couple of local officials, but also stern threats of punishment for the protests’ leaders.

Yet rounding up the usual suspects is no longer an adequate response on the part of the authorities. Thousands of villagers, who were promised a similar investigation after a demonstration in November, are so far standing firm (and their organizers demonstrating global media savvy). But blockading Wukan starts a countdown clock for ending the stand-off one way or another.

Few demonstrations have found the spotlight as Wukan’s have, or been allowed to escalate as far, but the discontent that provoked them is not uncommon. Across the country, villagers accuse local officials of colluding with developers and illegally confiscating collectively owned land without offering fair or any compensation. During the November demonstrations in Wukan, one protester claimed that local officials had pocketed 700 million yuan ($110 million) from selling land to developers for factories, while each villager received merely 550 yuan ($86) in compensation.

Land disputes have become one of the leading causes of the tens of thousands of large-scale protests that occur in China every year. Violent confrontation between Chinese and their government is becoming more frequent. In September hundreds of villagers overturned police cars and besieged government buildings in Wukan in protest against the land seizures, to which police responded with force in equal measure.

Earlier this month, Zhou Yongkang, the country’s security chief, warned that the economic slowdown could lead to a rise in social unrest, and told local party and government officials to deal with potential conflicts to minimize social unrest. Guangdong has seen its share of protests by factory workers in the past year, but none proved as difficult for authorities to deal with as the restiveness in Wukan, largely because of the systemic local corruption involved in most cases of alleged illegal land seizures.

Corruption is one of the “four dangers” that President Hu Jintao warned against at the Party’s 90th birthday bash in July. Wukan’s residents have appealed to Beijing for justice. Central government may well have to descend from on high to resolve the situation, but that is likely to mean that it will not end well for either local officials or the villagers’ leaders. Yet Beijing faces a Catch-22: social unrest has to be put down because it is a threat to its rule, yet so is suppressing a widespread and legitimate grievance on the part of its citizens, who do not see objecting to the corruption of local officials as a criminal act.

More Taxi Driver Protests Break Out

Chaozhou in Guangdong has joined a lengthening list of cities where taxi drivers have staged protests, many of which have turned violent (here via BBC).

The Chaozhou protests are over unlicensed cabs operating in the city, about which, the taxi drivers complain, the authorities have done nothing. Earlier this week drivers in Guangzhou threw bricks at unlicensed cabs. Earlier this month, police cars were damaged in Chongqing and other cars in Sanya. The ostensible cause of all the protests was competition from unlicensed cabs, there is an undercurrent of protests against high fuel prices and rising rental fees even though the economy is slowing.

In the broader scheme of things this is public protest at a low level though it has been given, intriguingly, a relatively high degree of exposure in state media. But it must serve as a warning sign to Beijing of what could happen if the social unrest senior officials have been increasingly warning of in recent days takes hold more broadly among a disgruntled population as the economy slows.