THE “NO. 1 DOCUMENT” (一號文件) published by the Central Committee of the Chinese Communist Party (CCP) on Feb. 1 describes how the spreading global financial crisis and economic slowdown is making its impact felt in the Chinese countryside. The document said that this year could be the toughest for the Chinese economy since the beginning of the new century — and even more so for agriculture. It shed light on the crises that are affecting China’s economic development and society as the financial tsunami sweeps across the globe. Under the circumstances, China’s leaders must be feeling wary and anxious.
As the financial storm rages, economies around the world have gone into a downward spiral of cutbacks in production, soaring unemployment and cautious consumer spending. China is known as the workshop of the world, and its economy depends heavily on exports, so it can hardly avoid the ill effects of the crisis.
Beijing has tried various measures to fix its troubled economy, such as subsidizing sales of home electrical appliances in the countryside in an effort to boost domestic consumption and clear stocks originally made for export. Unemployment is rising steeply in every country, and the situation in China must be worse than elsewhere.
The Labor Contract Law that came into effect at the beginning of last year has already prompted a number of manufacturers to move abroad. Now, as a new wave of factory closures and stoppages hits the country, the employment situation in China can only get worse.
In China, migrant workers from the countryside are the mainstay of the industrial work force, accounting for an overall majority of workers in the country’s cities and industrial zones. The total number of migrant workers is estimated to exceed 130 million. Hit hard by the global financial crisis, countless companies in China have gone bankrupt or halted production.
With no money coming in, laid-off or unpaid migrant workers have no choice but to go back to their home villages. Chinese officials estimate that about 20 million, or 15.3 percent of all rural migrant workers, have already done so. Given that non-agricultural earnings by now make up more than half of total rural income, it is hard to see how the countryside can absorb the tide of returning migrant workers.
The signs are that a social time bomb is ticking away and could blow up any time. That explains why the CCP’s No. 1 Document pays such close attention to rural problems.
In fact, China’s leaders have more to worry about than just the countryside. They must also consider the more than 6 million fresh graduates joining the labor market later this year. After enjoying double-digit economic growth for many years, China is now faced with the difficult challenge of maintaining growth of above 8 percent. Failing to do that, the repercussions will not be confined to the countryside. Factory closures, production stoppages, layoffs and unpaid wages — all knock-on effects of falling exports — have already sparked protests in many cities. It is only because the Chinese government has suppressed reports of such events — watering them down or blocking them entirely — that the outside world gets to hear so little about them.
It is fair to say that the global financial crisis has hit China where it hurts. Busy licking its own wounds, China has little scope for attending to the injuries of others. As a Chinese leader recently said, China has its own problems to deal with and can’t be expected to save the world. The message is clear: Taiwan’s economy cannot rely on China. Regrettably, President Ma Ying-jeou (馬英九), who has made easing rules on investment in China a key policy, has yet to comprehend this.
Talking on Feb. 3 to Taiwanese businesspeople with investments in China, Ma said “improving cross-strait relations is an important element in improving Taiwan’s overall economic environment and structure” and “the government’s policies over the past eight months have been correct, and we shall continue to promote them.”
Ma’s determination to follow his own course with no regard to reality is beyond comprehension.
Chinese Premier Wen Jiabao (溫家寶) has said that China will have some difficulty in keeping growth above 8 percent this year. Anyone with their finger on the pulse will detect in Wen’s words a warning that China’s economic situation is worsening. What Taipei should be doing at this time is to redouble efforts to reverse the fall in exports and encourage investment at home.
If the government insists on pursuing a policy of ever-closer cross-strait ties at a time when the Chinese economy is flashing warning signals and social unrest is brewing, then Taiwan is headed for trouble. As China’s economic situation worsens, Taiwanese firms operating there will not be the only ones that will suffer. Our fear is that, when the virus of China’s economic malady infects Taiwan, our immune system will be so low that Taiwan will succumb to the disease and collapse.
TRANSLATED BY JULIAN CLEGG
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