Manufacturing Slowdown Yields Unrest in China’s Heartland

Gordon Chang writes in Forbes that China’s abnormal November trade numbers, which included a jump in imports skewed mostly by commodity purchases (not imports of consumer goods) and the lowest export growth in months, overshadow social unrest caused by problems in China’s manufacturing heartland:

The problems in the export belt have triggered the ongoing series of strikes and protests, often numbering a thousand workers or more, in both the Pearl River delta in the south and the Yangtze River delta in the middle of the country. These large-scale demonstrations, in great cities like Shanghai and out-of-the-way locations such as Anji, are occurring when workers do not normally take to the streets.

Some factory owners say that conditions are more difficult now than they were in 2008, at the beginning of the global downturn. If recent history is any guide, the protests in China are about to become even larger, more violent, and more numerous after the country’s marks the Lunar New Year next month.

And perhaps that is why at the beginning of this month Zhou Yongkang, the Communist Party’s leader in charge of internal security, warned that unrest caused by China’s faltering economic outlook threatened the country’s political system. His remarks indicate that the Chinese economy faces severe challenges, despite the picture painted by November’s robust trade statistics.

An NTDTV report today notes the wave of industrial disputes that have hit China as factories report a sharp drop in orders. With export expansion waning and possibly falling to zero next year, the Ministry of Commerce announced the government’s intention to take action as Chinese officials convened in Beijing for a Central Economic Work Conference to map out economic policy in 2012. From China Daily:

These measures include supporting exporters’ drive to tap emerging markets, approving the establishment of 59 export bases, strengthening traditional industries and helping exporters in the central and western regions expand overseas.

Conditions next year “will be more complicated and severe for Chinese exporters, and the task for the Chinese government in maintaining stable export growth will be harder” said Zhong Shan, vice-minister of commerce, during a foreign trade meeting in Beijing.

His remarks came after the General Administration of Customs released November trade figures on Saturday. Export growth continued to decelerate, the figures show, and overseas sales were up just 13.8 percent year-on-year, the smallest gain since 2009.

“Several difficulties and uncertainties do and will exist, and we will have measures in place to stabilize exports as noted in China’s 12th Five-Year Plan covering the 2011-2015 period,” Zhong said.

See also “Is Winter Coming for China’s Economy” via CDT.