Friday, February 13, 2009
Well, back to the classics of this blog--speculations on top level positions. The Chinese press reports a rumor that Guo Shuqing, currently head of the China Construction Bank and former SAFE chief, will be moved to replace Shang Fulin as the head of the CSRC. That is certainly not the first time we have heard of such a rumor. However, whenever these rumors begin to circulate, it always makes you wonder what will happen to the incumbent, in this case, Shang Fulin.
Shang is by no means old at age 58. He can possibly serve a term as the governor of the PBOC, which is his dream job (how do I know this, read the dozens of articles he has written on monetary policy). But then, what will happen to Zhou Xiaochuan, who is still a few years away from retirement at age 61? Will he get Dai Xianglong's somewhat disappointing fate, i.e. mayorship or governorship in some province? If Guo indeeds becomes the head of the CSRC, here are some possible consequences:
1. Shang steps down to the provinces as governor; Zhou stays for a few years until Guo can take over his position.
2. Shang becomes the new governor of the PBOC; Zhou steps down to the province; Guo will take over from Shang as the governor of PBOC in a few years.
3. Both Shang and Zhou step down to the provinces; Guo becomes the head of CSRC or is helicoptered to the head of the PBOC; some other person (Gao Xiqing?) takes over as head of CSRC.
Note, in all three scenarios, Guo eventually becomes the head of the PBOC. I think this is almost pre-ordained as no one else in his cohort seems really qualified (in both political and technocratic sense-- Yi Gang is qualified, but not so much politically). Let's hope that Guo treads carefully so as to avoid various "traps" before he ascends to higher positions.
http://www.sina.com.cn 2009年02月14日 04:23 华夏时报
本报记者 贺江兵 北京报道
2月10日，《华夏时报》记者从一条官方渠道和一条非官方渠道获悉，郭树清或出任中国证监会主席。建行新闻发言人对本报记者表示，他“不知情 ”，但是，并未否认该消息的真实性。建行表示，如有重大事项，董事会会开会讨论，并会及时公告。换言之，建行并未证实郭树清是否出任证监会主席，媒体所言 “建行否认郭树清出任证监会主席”亦是对发言人话语的误解。
I have been engaged in a discussion with an esteemed colleague on whether the current wave of migrant worker unemployment is similar to the last wave of unemployment, which took place in the late 90s when millions of state-owned enterprise (SOE) workers were laid off. The argument seems straight-forward. Back then, tens of millions (even as high as 50 million) SOE workers were laid off or furloughed with minimal compensation. Aside from thousands of small scale protests in industrial towns, China weathered that wave with few signs of general instability. Why should it be different this time, especially when urban residents now receive minimum living assistance of 2-300 yuan a month and rural residents receive 1-200 yuan a month (assuming the system works perfectly). However, there are some key differences off the top of my head: 1. SOE workers in the late 90s tend to have housing in their factories already, rent free. Migrant workers, should they decide to stay in cities, must pay for housing, which can be quite costly as a share of social security payments.
2. Migrant workers are now on average much younger than laid off SOE workers. A Caijing article has an age break down, and eye-balling it suggests an average age of low to mid 30s, which is quite a bit younger than the average laid off SOE workers of the late 90s (mid 40s to mid 50s). This means migrant workers would not be happy with just a lump sum payment (typical way of settling the SOE workers) and would want increasing opportunities. If frustrated expectation could be measured, I would guess this wave of unemployment, whenever it peaks, will generate much more of it than in the late 90s.
3. Furthermore, SOE unemployment mainly did not affect the welfare of others, especially in insulated factory towns. In contrast, migrant wages are intimately tied to the welfare of 320 million rural laborers (and a much larger body of rural residents). In 2007, wage income made up as much as 40% of rural income. On the margin, growth in wage income contributed to at least half of the rural income growth, if not more. With migrant workers returning home and wages falling for those who are still employed, the income impact on rural households will be enormous. To be sure, the government is trying to counteract it with subsidies, but the impact will be limited.
4. SOE workers lost their jobs, but at least they were not fighting for shrinking resources with those in their own communities. All the workers in a factory town suddenly lost their jobs, but they all still had access to basic goods like housing and some utilities. They all went to petition the government for some money. There were few sources of conflict between the laid off workers. Currently, return migrant workers are fighting for limited land and food with people who chose to stay at the farms. On top of that, there is a severe dought in much of northern China, where many migrant workers come from. The level of local social conflict is probably much higher in this round.
So what if it's worse this time around? As I indicated in a previous post, this just increases the potential for a systemic shock. Of course, it may not happen, but the probability is higher, especially in large cities near where migrant workers live, such as Zhengzhou, Chongqing, and Chengdu.
Ｉfeel in the eyes of central leadership, urban workers are much more destructive given that they suffer the same level of deprivation than migrant workers due to the traumatic memories decades ago.
My name is Robert (Bobby) O'Brien. I am a fellow G.W./Elliott School Alum currently enjoying a year as a Fulbright Scholar in the P.R.C. My research was originally designed to examine the many ways in which China's 'nongmingong' were stimulating rural social, political, and economic development. In the wake of the global financial crisis, however, I have been focusing more on the impact of the economic downturn on China's migrant workers. In addition, I have been looking at how the central and provincial governments are responding to the massive layoffs that have led so many to return home to the farmlands. I can't offer much insight into how SOE layoffs in the late 90s compare to what is happening on the ground now, but I can provide some information on the current wave of unemployment striking China’s floating population.
You noted the relatively young age of the current generation of laid-off migrant workers (I would be interested to see that Caijing article if you could forward it my way). My (anecdotal not statistical) research confirms this finding. The majority of those losing their jobs are in their late teens to mid-20s, having left home for the coastal cities sometime within the last few years. In your post, you also discussed the potential for frustrated expectations to lead to social unrest. I agree wholeheartedly that this is a distinct possibility. I do not, however, expect such social unrest to develop on a large-scale anytime soon. Most of the migrant workers I have talked to do not yet understand the full impact of the economic crisis on their employment prospects. They view being laid off as simply a temporary setback and expect that they will be able to find work in another city. Not until after they have traveled around a bit and failed to secure a new source of income will we begin to see the manifestations of social unrest that accompany frustrated expectations. I expect that as time passes we will see a significant rise in “mass incidents.”
You mentioned government plans to combat the significant loss in income most rural households are now facing. I have recently commenced work on this topic, focusing my research on programs being developed and implemented in Henan, Anhui, Jiangxi, and possibly Sichuan. A review of relevant literature and a few conversations with scholars familiar with such plans indicate that all the programs are “locally developed and locally funded.” The central government has been touting entrepreneurship as a panacea to the problem of massive migrant worker lay-offs (the China Daily carried an article on it) and some provinces have acted in kind, providing modest loans for the establishment of new businesses. Other plans I have stumbled across range from encouraging tree farming to simply providing the unemployed with a one-time minimal lump sum ($73). If this is something that you are interested in, I can keep you posted as I dig deeper and attain further clarity as to how migrant laborers are being supported by the government after they return home.
As for social conflict resulting from competition over limited resources in the villages, I think this is a distinct possibility. I should note, though, that the farming villages I traveled to in late January featured little of this phenomenon. As you noted, many of those being laid-off are young and were attracted to the cities not necessarily by push factors (economic needs) but rather by pull factors (economic wants, excitement, etc.). Thus, they plan to return home and live off the land and the labor of their elders and aren’t particularly concerned about acquiring a spot in the fields or a pen to raise pigs in. I’m sure, however, that this is not the case everywhere. Furthermore, in areas where the natural resources simply can’t meet the basic needs of the local citizenry (the drought may lead to much of this) social conflict is bound to ensue.
I enjoyed reading this post and think it features some great insight. I hope I was able to provide some useful info. on how the economic crisis is playing out in the migrant worker realm.
Please feel free to contact me at email@example.com.
Tuesday, February 03, 2009
Oops, forgot to post this from RGE Monitor. Incidentally, a reader commented on RGE that 35+ million is only 2% of China's population. But that's not how unemployment is calculated anywhere! Official total urban labor force was 293 million at year-end 2007, meaning around 300 million at year-end 2008. We can add 130 million for total migrant population, so the total urban labor force including migrant labor would be 430 million. You can do the math here on unemployment rate then if 35 million are unemployed, over 8%.
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Victor Shih | Feb 2, 2009
In a press conference today, the vice head of the office of the Central Finance and Economic Leading Group (see this paper for what this organization is--it's powerful) Chen Xiwen revealed some important figures on unemployment. In a previous post, I speculated on an unemployment figure that was 35 million by the end of first quarter of 2009. According to confirmed figures, we have already surpassed that figure. For the sake of completeness, I translate the relevant passages verbatim:
Chen Xiwen: Not long ago, the Ministry of Agriculture organized a survey which drew samples from 150 villages located in 15 provinces which exported more rural labor. The sample focused on the approximately 38.5% of rural labor who returned home before the lunar new year. Of those who returned home, some 60.4% were home on regular visits to their family. That is to say that their jobs in the cities are still preserved, and they will return to their jobs after the holiday. Of those who returned home, 39.6% of the respondents reported that they lost their jobs or have not found a job, thus returning home. According to these figures, of the 130 million rural labor who are working elsewhere, we think 15.3% in total have lost their jobs or have not found employment (in cities). According to the ratio of 15.3%, we can calculate that out of the 130 million of rural labor working elsewhere, approximately 20 million of them have lost their jobs or have not found employment due to economic unwellness.
My estimate of migrant unemployment was based on a higher figure for the total migrant population, which caused me to overshoot on migrant unemployment. There are some quibbles on this issue because how far do you have to travel away from your native village before you are considered "migrant." Nonetheless, as of this point, based entirely on official estimates and figures, we have 20 million unemployed migrant labor plus 1.8 million unemployed college graduates from 2008. In addition, there are around 15 million or so in registered urban unemployed (this means they are not migrant workers, but residents in major cities). Thus, in total, official figures already reflect an unemployed force of 36.8 million.
To be honest, I never thought we would reach these figures so soon, considering that these figures are based on data collected before the middle of January. I was thinking that we would reach this point after the lunar new year. Now, additional number of migrants who either stayed in cities or returned home will soon find themselves unemployed. In addition, even relatively secure urban jobs (retail, services) may begin to disappear as the impact of the export slow-down hit the service sector. Thus, we may see an unemployed force of 50 million much sooner than the end of 2009, as I previously predicted. There have been no real policy responses so far, except for marginal moves like cheaper consumer electronics in the countryside and passing out some payments to unemployed college graduates. Up until this press conference, the official Chinese government line has been that if migrant workers return home, then they are not "unemployed" per se since they can work the land. This attitude of course ignored the fact that income per capita and productivity both decline if young people stay home, not to mention frustrated expectation. Given more mouths to feed, how are they suppose to buy flat-screen TVs, even if 20% discounted! At least the government now acknowledges this as a problem, which is an important step. We will see what they do in response now.