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WEB EXCLUSIVE: CHINA: LOOKING INWARDS

Smriti Rao Feb 27, 2009

This winter, Mu Quyang, a migrant worker from Sichuan, may be the exception rather than the rule.

Unlike an estimated 20 million laid-off migrant workers deeply affected by the global economic crisis – Mu still has a job. He works in a factory that produces monosodium glutamate – a gourmet powder used to enhance the flavor in Chinese dishes. He brushes aside any remarks about the effect of the economic crisis on the food industry. “No matter what, the Chinese will always eat,” Mu said.

It’s an optimism that is not shared by 30-year-old Xi Shupeng. Working in Shantou, a Guangdong export hub, Xi and his wife were laid-off from their factory jobs last November.

When Xi returned to his village in Henan province for the traditional Spring Festival, he stayed put. And he was not alone. “One third of the village is back,” Xi says. “At this time, last year no one would have been around.” An estimated 600,000 workers returned to Henan province since the beginning of the global meltdown.

As China’s largest trading partners, including the United States, began to slip into a recession, foreign orders at Chinese plants began to dip. As manufacturing slumped, workers like Xi and his wife were laid off. Now, this large pool of workers float in a sea of uncertainty in China – unsure whether to remain in the cities along the industrial coastal belt from Shandong to Guangdong or head back to their rural homes.

Nowhere does this plight play out more dramatically than at the train stations in industrial cities like Dongguan. “These huge crowds of migrant workers gather in the train station,” says economist Ronald Schramm. “They are caught, neither here nor there. They don’t have a job in the city, but don’t have a home to go back to in the village either,” Scrhramm says.

When the laid-off migrants decide to stay back in the cities, Schramm says, they begin to be viewed with ambivalence by the local authorities. “Not only are the workers not working,” notes Schramm, “but the families are in school, using social services.” This may prompt local governments to think that because the migrants are not fully participating in the economy – they need to go.

But to where do these migrants return? Many of them traditionally made the trek back home for the Spring Festival, returning to the cities after the break, switching jobs and hoping to move up the pay scale. But now, thanks to the global economic crisis, a trip that is normally undertaken with much joy and nostalgia is tinged with gloom.

For migrants like Xi, returning to his native village in Henan province was a tough choice. “There are no jobs here,” he says as he details his continued look for opportunities in other cities and in sectors like fishing and construction.

The journey home for Xi comes at a time, when Henan is battling not just rough economic weather, but also the worst drought in the province since 1951. Arid land and the absence of running water- makes the return to farming an unviable and indeed unattractive proposition for these workers – an estimated seven to 10 million peasants – who were “freed form farming” to pursue more lucrative factory jobs in the city.

Li Yanyan is one of those who moved from the farm to the factory – moving away from her Henan farm village of Houxi, with her husband, to work in the Pearl River Delta in 2002. Now, back home in her village she is anxious to get a job back in the city so she could be re-united with her husband who remains there. She gathers with her friends each morning, and exchanges information about any possible job openings in any city. “We will leave the village, only when there is confirmed information about a job,” Yanyan says. “It will be a waste of money if you go out with incorrect information.”

THE STIMULUS PACKAGE

As millions of migrants like Xi and Li wait anxiously for the economy to pick up, an increasingly nervous Chinese government – fearing widespread social unrest – stepped in and announced an ambitious four trillion yuan ($586 billion) stimulus package last November. “The key word across China right now is stability,” Schramm says. “This will be an interesting challenge,” he adds, noting the economy has already cooled from a growth rate of 11.9 percent last year to 9 percent this year. While these figures would seem commendable for any other economy, it has jolted China into pressing the panic button.

The Chinese Stimulus package is to be spent over the next two years. It amounts to 14 percent of this year’s estimated gross domestic product and, in dollars, is four times as large as the U.S. fiscal stimulus passed earlier this year. The main spending areas include public housing for poor households, upgrading the power grid, increased spending on health and education, and infrastructure projects such as railways, roads and airports.

A few of the largest projects include the $17.6 billion passenger rail line across the deserts of northwest China, a $22 billion web of freight rail lines in Shanxi province in north-central China, and a $24 billion high-speed passenger rail line from Beijing to Guangzhou in southeastern China.

As these large infrastructure projects get underway across the country, labor mobility will be a key factor in favor of the government. “The government is able to say, ‘you guys should go out to this part of the country,'” Schramm says, referring to migrant workers looking for jobs, adding the government would find incentives to move the workers to areas where projects are being implemented. He also agrees that infrastructure investment like building more bridges and railways in a developing country like China has a better prospect of boosting growth and stimulating more long term employment than tax cuts or welfare benefits.

While the Year of the Ox will undoubtedly be a tough year for migrants like Xi and Li, 2010 is likely to hold more promise, as several infrastructure projects start to kick into gear.

But for now it is not just the migrants, but also their bosses – the factory managers – who have been eyeing the future with trepidation.

“We have been looking at the papers, looking at the news,” says Yang QingFu, a manager in an export unit in Guangzhou. “We don’t think it will last that long,” he says referring to the factory lay-offs. After a long pause, he adds, “hopefully.”

To read Walden Bello’s analysis on Asia’s economic turmoil, click here.

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