Socialist Worker

Growth in Chinese inequality leads to rise in protest

In the final part of our series Charlie Hore looks at the insecurity facing people in China today

Issue No. 2066

Exploited in China (Pic: Angela Stapleford)

Exploited in China (Pic: Angela Stapleford)

Sometime this year, China will overtake Germany to become the world’s third largest economy. The Chinese economy has grown by more than 10 percent every year for the last 17 years.

Most economic forecasters believe that this boom will carry on endlessly, and that later this century China will become the world’s greatest economic power.

In reality the Chinese boom is much more fragile than many admit.

China’s economic growth is almost entirely built on producing or assembling consumer goods for export to the US.

The US supermarket chain Wal-Mart alone buys more Chinese exports than Britain.

China has a trade deficit with the rest of the world – buying in raw materials, components and energy supplies from the rest of Asia, Africa and Latin America in order to produce the exported goods.

That production is heavily concentrated in the south eastern coastal provinces.

It is increasingly produced by foreign-owned factories – almost 90 percent of China’s electronics exports come from foreign-owned firms.

These imbalances make the Chinese economy vulnerable to any slowdown or recession in the US – which is looking increasingly likely, as the recent nervousness in the stock markets show.

Even without a US recession the current rate of growth is not sustainable.

As the economist Will Hutton argues in his new book, The Writing On The Wall, to state otherwise assumes that “over the next 15 years Western multinationals in China are going to continue increasing Chinese production and exports at six or seven times the rate of growth of their domestic markets.

“This is both a mathematical and an economic impossibility.”

There are also internal factors which will undermine the boom. One of the major ones is a looming labour shortage.

Working conditions in the exporting industries are punishing – 13 or 14 hour days, six or seven days a week. Worker turnover is very high, and these factories rely on a constant supply of fresh labour from the countryside.

Increasingly, migrant workers have been refusing these conditions, and many of the exporting areas have had labour shortages.

One recent government survey found that in three quarters of villages there were no more peasants available to move to the cities.

In part this is because the government has been improving pay in the villages in order to boost food production. But in many villages everyone who can go to the cities has already gone.

Will Hutton also cautions that almost every multinational company which could produce in China is already doing so.

China’s boom is founded on cheaply producing particular types of consumer goods – clothing, shoes and electrical goods.

But not every capitalist can take advantage of China’s cheapness – Rupert Murdoch can’t get the Sun printed in China, for instance.

And for heavy industry the “China advantages” are almost non-existent. Heavy industry is growing in China, but almost entirely for domestic consumption.

A further internal limit to growth is the environmental damage done by decades of unregulated growth.

Sixteen of the world’s 20 most polluted cities are in China, and most of China’s rivers are now so polluted they are undrinkable.

This is becoming a barrier to further economic development, not least because there have been a number of major protest movements against polluting factories.

China has seen a series of protests that have grown as the economy has boomed. The last 15 years have seen more action from below than at any time since the 1920s.

Those actions – strikes, demos and riots – have grown because China’s boom has made everyday life more insecure even for those whose living standards have risen.

Tens of millions of workers in older industries have lost their jobs, and peasant incomes in many areas are stagnant or falling.

The boom has created greater inequality than at any time since 1949.

China’s growth has not made the world economy more stable. Faster growth and greater dynamism have led to greater political and economic instability.

That’s true both of China, and of the relations between China and the rest of the world. If China is the future of capitalism, then that future is an unpleasant, tense and insecure one.

For China’s workers and peasants, the market is no more a solution than Maoism was.

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