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On Point

China's Turbulent Moment


by Austin Bay
September 29, 2010

Chinese "workers are becoming harder to find and to keep," The Economist magazine recently reported. "Strikes have been unusual in their frequency ... their longevity and their targets ... ." The Economist argued this is ultimately good news for planet Earth.

This labor "bolshiness" (wonderful ironic word choice) will lead to higher Chinese wages. "What the world lacks," Economist editors concluded, "is willing customers, not willing workers. Higher Chinese wages will have a similar effect to the stronger exchange rate that America has been calling for, shrinking China's trade surplus and boosting its spending. "

In other words, Chinese workers will spend, benefiting the global economy. This is good news, if it works out so niftily.

Demographic issues, however, also factor into the reduction in willing cheap labor. China's population is aging. Reuters reported (citing official figures) that "the proportion of people aged 60 and above in China rose at the fastest clip in history" in 2009. "They now represent more than 12 percent of the population."

Reuters quoted Wu Yushao, deputy head of the China National Committee on Aging, as saying that the increase in aged people "will be a huge challenge. ... The economy, the retirement system and services for the elderly are still too weak to handle the challenge."

Is China the ultimate Greece, with too many promises and not enough cash? When it comes to economic forecasts, there are lies, damned lies, productivity statistics and age demographics. Reuters mentioned one culprit: Chinese government policy, specifically China's notorious "one-child policy," which was supposed to promote zero population growth. In my opinion, it resulted in the murder of a lot of baby girls and contributed to China's demographic conundrum.

Other domestic problems haunt China, and the list of ills is depressing:

Internal Disorder:  China's primary threat is not the United States, or any other foreign power, but internal disorder. There are more angry people in China every day, and the government knows that this could blossom into widespread uprisings. It has happened so many times before in Chinese history. Protesting factory workers are an indicator.

Corruption:  Corruption is the biggest complaint among China's discontented; government officials, who are more interested in enriching themselves than in taking care of "the people" are particular targets. Many of the demonstrations and labor disruptions are the result of corruption among local officials, including the police.

The Communications Dilemma:  In 2007, Chinese Internet use grew to over 210 million users. Cell phones are also increasingly available. China is the world's largest cell phone market. The Internet is an economic and educational tool. However, it also undermines an authoritarian government's ability to control (deny and spin) information. China's 2010 "war with Google.com" illustrated this dilemma.

Ethnic Minorities and Language:  China has a population of 1.4 billion. Han Chinese ("ethnic Han") constitute approximately 92 percent of China's population. China also has 55 "minority nationalities," however, amounting to 100 million people. The 2009 Uighur riots in Xinjiang province (western China) and resistance in Tibet are symptomatic of the problem. They are resisting "Hanicization."

Pollution and Water:  In early 2008, China began shutting down "high pollution" factories. The reason? To clear the air for the 2008 Beijing Olympics. The growing wealth of the Chinese people is causing enormous pollution problems and water shortages. Effective pollution controls mean more expensive production methods. That makes Chinese goods less competitive.

The Marriage Gap:  China's "one child" policy crimped population growth, all right. More boys were born than girls; Chinese culture "favors" sons. As a result, there is a serious imbalance between men and women. In some places, there are 120 men per 100 women. Marriageable daughters are, reportedly, going largely to the upper social groups within each village or district. The sons of the poorest families are, to an extent, not finding wives. This is an indicator of future social trouble.

The domestic ills suggest China is on the verge of another revolution, this one caused by its failed communist regime's inability to transform itself into a more accommodating system that can satisfy (and shape) China's growing economic and political needs. 

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