From the Financial Times via Naked Capitalism:

More than 20m rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis, government figures revealed on Monday.

Or, as Naked Capitalism notes:

To the sighting du jour: a Chinese official, citing Agricultural Ministry data, pegged the number of rural migrants to coastal factories who are returning home at 20 million. This figure is far higher than any to date (readers may have other sources that are more in line with this tally, but the biggest estimate I have seen so far is 10 million, although Wen fessed up to 12 million yesterday, so the new data is a stunner). And that is only the level of reverse migration. The figure does not include those who remained in cities and are still looking for work.

This would in turn suggest that the falloff of economic activity is as severe as some of the less watched proxies suggest (electrical output, which some contend is a good measure of economic activity, fell 9.6% in November, a dramatic one-month change) and that the government will increase its stimulus efforts sooner rather than later.

I never understood the fatalistic thinking, at the start of this economic crisis, that the US was done as a financial power and the rise of China was inevitable.

What the Chinese government wanted from this expansion was not wealth, not economic dominance—what the Chinese communist party needed more than anything else was jobs, millions upon millions of jobs. Even with all those jobs, the country has barely held a growing social unrest—fury against religious persecution, the deaths of children due to poorly constructed schools or poisoned formula, the environmental decay or a long list of other grievances—under control.

Busy people don’t revolt. The Faustian deal of the Dengist movement (currently in power in China, as they have been since the end of the Cultural Revolution) was the exchange of jobs for freedom. Central control would be tolerated so long as jobs and economic opportunities continued to flow.

It worked for a bit, during the froth of the past decade-plus of economic expansion. But the Chinese employment growth was false, artificially maintained by a policy of actively pushing Chinese wages downward through currency manipulation. It was, in every literal sense of the word, unsustainable.

With the bursting of the global economic bubble, it’s hard to find a country more fucked than the Chinese. Naked Capitalism starts his post by hemming and hawing that the grim economic news coming out of China doesn’t necessarily predict a violent rebellion—despite a history of such catastrophic movements at previous stress points. I’m less certain than he.

Jonathan Golob is an actual doctor.

18 replies on “Twenty Million Chinese Migrant Factory Workers Lose Jobs, Give Up, Return Home”

  4. Jonathan, a minor semantic correction — those migrant workers were already migrating home a couple of weeks ago, as part of the largest annual human migration on Earth, which coincides with Chinese wanting to be with family for the Lunar New Year celebration. What’s different is that this year, one in seven of them did not have their jobs to return to in the factory cities.

  7. @ Non: Thanks. I like Charles, however.

    @boyd main: Even before this crisis, most of the US government debt was *not* purchased by the Chinese (as a percentage of the total.) Still, this is indeed pushing pressures more towards inflation (if not hyperinflation) and away from deflation–which could be a mildly positive thing. (At least by look at the pricing of TIPS, things are pointing more towards inflation.)

    @ Peter F: Exactly that. It wasn’t the leaving, it was the non-return to the cities. And, as Naked Capitalism pointed out, this doesn’t count the millions who returned and are jobless looking for work.

    @Rotten666: I tried to stick to post-civil war Chinese history for examples. But indeed.

    @6: The causes and historical context of the Colonial revolution aren’t a clean metaphor here. This is more like a Wiemar German-style situation brewing.

  8. Jonathon, I think Chinese nationalism is a very important element to current CCP policy that your post didn’t touch upon. Jobs are certainly important to what they call “harmony”, but the underlying assumption of your post is that anger about job loss will be directed inward. I think it is far more likely that rising social unrest in China will result in anger directed outward: towards the U.S., Japan, and Taiwan.

    I lived in China for a number of years, and virtually everyone I knew supported war with the U.S. to prevent Taiwan independence. Most Americans don’t know the difference between Taiwan and Thailand.

    The only ideology that binds China today is nationalism. Religion and Maoism have been replaced by an angry pride in Chinese history and an angry pride in China’s current rise from the humiliations the west has inflicted upon them since the Opium Wars. I think it would be dangerous to underestimate the nationalist fervor of the Chinese and expect that social unrest there won’t have global military consequences.

  9. @facet:

    You know, I thought about this very point–and cut it from the post as Slog seemed like the wrong place.

    I even considered if the CCP would make it official policy to demonize and blame the US. Since the election, I’ve been following the People’s Daily–and it seems like there is at least inching into the direction of strongly blaming the US for the problems.

    I’m just not sure how well that’ll work in the rural areas, where it seems like the most challenging unrest will arise.

    Looking back at the history of China and the US, in a strange way both countries really have been supportive partners for one another. The US and Americans actively fought against the Japanese occupation, and subtly worked against the European powers carving up China in the Modern imperial era–strongly arguing for independence. It’s not been a perfect relationship, but the duet of China and the US has been a pleasant melody for most of our shared histories.

    It would be sad for it to end in violence.

  10. Also worth mentioning is that it isn’t just the migrants out of work — this year’s graduating class of Chinese college students is finding a distressing lack of jobs.

    And China being fucked is hardly good news for the US — their massive subsidizing of our spending may have helped drive this bubble (or bubbles) that just collapsed, but we’re depending to them to keep buying up our debt in order to give us a chance to avoid complete collapse. We’re tied to the same anchor heading to the bottom…

  11. Jonathon, thanks for writing back; I’d love to read that bit you cut. I think you’re absolutely right about converging Chinese and American interests throughout history. Even after the Korean War the Chinese had skirmishes with both the Vietnamese and the Soviets, though for different reasons than the Americans.

    The disgruntled rural population certainly poses a hazard to the CCP, but I think they can accomplish little in terms of reform without getting the intelligentsia to go along with them, which seems unlikely. If the steam builds up too much within the country, the government will simply direct it outwards.

  12. @Peter F:

    The Chinese slang for college graduates is now “cabbage” (大白菜), because of their high availability and low market value. Sad.

  15. I’m not surprised.

    Really crappy sales over the holiday gorge-fest mean that a lot of people who make all those cheap plastic toys and clothes and electronic gadgets are going to be out of jobs soon. Most of that crap is made in China. Thus: really shitty retail sales in the US = lots of chinese people out of work.

    I would also expect similar employment issues in Taiwan, India, and many other 3rd world countries that provide uber-cheap labor producing cheap products for the US. They may have different social and political consequences, but I think we will see widespread job loss in a lot of 3rd world countries.

  17. @16: My experience is that voting is the last thing the vast, vast majority of Chinese are interested in. The spirit of Tiananmen has almost completely been wiped out. The CCP is nowhere close to losing power. Faith in the central government remains high. Virtually all the protests that take place in China now are petitions to the central government to halt local decisions seen as unjust.

    Chinese political radicals today are working to push the government into following its own laws. It’s a battle for rule of law, not change of law.

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