China’s Iron Rice Bowl – Part 2
In last one and half years Chinese government has tried to sustain its economy by reducing interest rates and by giving out bailout packages to state-owned enterprises (SOEs). China has been regularly devaluing its currency to stabilize its exports-dependent economy. But still, all these efforts are falling short with decline in manufacturing, reduction in exports and bankruptcy of SOEs. To come out of this mess Chinese government has further taken up urgent reforms and also proposed new economic blueprint.
But what is most striking is, China is forced to cut down its industrial output in some sectors and also cut industry costs for economic sustenance. These decisions are mainly causing unrest in the masses. China has indicated to cut approximately 6 million jobs. In month of March this year, China cut 1.8 million jobs in steel and coal industry. This is biggest job cuts till date. Though government has announced that further job cuts will gradual but ultimately in two year time 2 million workers are slated to lose their jobs. And when other sectors and industries follow on job cuts the job loss figure is expected to reach 6 million. SOEs have historically played crucial role in growth of China. They are spread across globe. But now many of these companies have been declared bankrupt. Few weeks back in Guangdong province of south China, thousands of coal workers protested against job cuts. These workers were not paid for months and ultimately sacked.
What has made the Chinese government concerned is the scale of the protests which is unseen in last 25 years. Since June 2015 there has been a 200% rise in protest and agitation in China. It was during 1990s that China had last seen such protests due to the very same reason of job cuts in addition to forced retirements. But recent anti-government protests are much bigger than of those of the 90s. Also, the economic growth of the 90s can’t be compared with the current levels.
And hence to divert attention and to instil false national pride China is racking up issues like ‘South China Sea dispute’ and ‘East China Sea dispute’ involving with it Brunei, Taiwan, Malaysia, Philippines, Japan, South Korea, Vietnam, United States, etc. and ‘Arunachal Pradesh border and visa dispute’, ‘illegal construction inside Pakistan Occupied Kashmir’ with India.
To be continued.....