Beijing’s $586 billion economic stimulus package may or may not contribute to infrastructure modernization, represent a national policy of turning-inwards, and positively impact the global financial community. But with an anemic stock market, a depreciating real estate industry, and inflation and unemployment mounting, the social effects are manifest to Chris Devonshire-Ellis. From China Brief:
In Shanghai last week for example, I witnessed, in one evening, minor altercations that would demonstrate surface tensions are increasing. A minor traffic incident at a crossroads, with a taxi too close to bumping a pedestrian, instead of being restricted to a few choice words, resulted in the parties wrestling each other to the ground and punching each other furiously. Staff in hotels, restaurants and bars deliberately seeking to inflate prices, add dishes that were not ordered or simply charging for drinks not consumed seems to be more prevalent than before; with the threat of violence if the matter is not resolved in their favor. I heard several stories, and experienced one incident personally, where drinks were poured upon request, on a tab. Come the bill, and it’s far more than could possibly be the case. Cue heavies appearing. In our case—and I’ve been in China a long time—the equivalent of US$500 was requested for four beers and ten whiskey-cokes. And this was in a popular, well known and very busy establishment.
Such a change in attitude can only be alarming. “Before, when everyone was making a lot of money, we could charge reasonable prices, and make more than enough. Now we have to be unreasonable if the market is letting us down. We’re just passing on the unreasonable nature of the market to our customers,” said one Chinese person I asked about it.
The government is also beginning to publicly acknowledge its concerns. BBC News reports:
Chinese Premier Wen Jiabao says the effect of the global financial crisis on China is “worse than expected”, according to reports.
It is the first time the premier’s personal view on how the crisis is affecting China has been made public.
Update, from the New York Times:
The Pearl River Delta, known as the world’s factory, powered an export industry that pushed China’s annual growth rate into the double digits and provided work for migrants from interior provinces with poor farmland. But circumstances have changed quickly. The slowdown in exports contributed to the closing of at least 67,000 factories across China in the first half of the year, according to government statistics. Labor disputes and protests over lost back wages have surged, igniting fear in local officials.
After the shutdown of their shoe factory, called Weixu in Chinese and China Top Industries in English, Mr. Wang and some co-workers took to the streets in protest, demanding two months of back pay, or $440 on average. The government called in the riot police. Seven workers were thrown in jail and six were beaten, including Mr. Wang, he said.