Anger in China increases as the economy falls

As one former worker, a 36-year-old mechanic who agreed to be quoted by his surname, Zhong, describes it: A group of workers was in discussions with management about termination pay when a dispute broke out. “We saw the police beating five workers with sticks, several of them unconscious... Then many workers rushed out and surrounded them. Later there were thousands of people there. They smashed police cars, doors and computers.”

The financial crisis is hitting hardest in places like Dongguan where factories once churned out toys, shoes and clothing to satisfy the seemingly insatiable demand of American consumers for ever-cheaper merchandise. Now demand has plunged because of the recession in the United States and the flurry of scandals over tainted foods and dangerous toys produced in China. The Chinese government reported Wednesday that for the first time in seven years, exports last month declined. In the toy industry alone, figures from the General Administration of Customs showed that half of the companies — 3,531 in total — had gone under since the beginning of 2008. .

The laid-off workers are almost all migrants who may not have anywhere to return to.

Zhong and his wife, who is seven months pregnant, come from an area in Sichuan province that sustained heavy damage during the May earthquake. “We are just wandering around now looking for work,” Zhong said.

This floating population of the unemployed and desperate is one of the Chinese government’s nightmares.”The redistribution of wealth through theft and robbery could dramatically increase, and menaces to social stability will grow,” warned Zhou Tianyong, an economist for a government think tank, in an editorial last week in the China Economic Times.

But it is not only the migrants who can turn unruly.

Young professional homeowners trashed the showroom of a real estate complex called Glamorous City in Hangzhou, Zhejiang province, after learning that the developer was offering a 25 percent discount as an incentive to prospective buyers of the same units for which they had paid full price.

Middle-class Chinese are relative novices when it comes to investing, unaccustomed to the risks of real estate or the stock market — and quick to blame the government when what they thought could only go up instead goes down.

The anger is palpable at a Beijing stock brokerage where investors sit on a row of orange plastic chairs sipping teas from jars they’ve brought from home and watch the latest indignities flashing on the electronic billboard of stock prices.

“Hu Jintao and Wen Jiabao did nothing to help,” snaps one man in a voice that cuts through the background clatter and makes the others — unaccustomed to hearing gripes against China’s president and premier spoken so loudly — turn around to hush him.

A basic structural problem in the Chinese economy is that wages and living standards have not kept pace with the extraordinary growth. As a result, consumers aren’t prosperous enough to pick up the slack and keep the economy rolling in the face of reduced demand from the United States and Europe.

The Chinese government has lowered interest rates several times and last month announced a US$586 billion stimulus package. More measures are anticipated, but economists are dubious about their likely effectiveness.

“The government’s economic policy is still geared to producing high growth figures, but not to producing jobs or raising people’s disposable income,” said Mao Yushi, one of China’s most prominent economists.

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