When we finally face off with China, we need to do it somewhere with a lot of curbs and stairs.

that was certainly an interesting read dk.

are you studying this shit?

i'll need "this shit" defined to answer that second question.

i suppose history is what i was asking, but i think the simpler question is: what's your major?

haha political science and economics are my majors. history minor. i took an 'oil, the persian gulf, and world power' history class last fall which first got me interested in geopolitics (among other things).

Chinese Factories Now Compete to Woo Laborers

By ANDREW JACOBS

ZHONGSHAN, China — If Wang Jinyan, an unemployed factory worker with a middle school education, had a résumé, it might start out like this: “Objective: seeking well-paid, slow-paced assembly-line work in air-conditioned plant with Sundays off, free wireless Internet and washing machines in dormitory. Friendly boss a plus.”

As she eased her way along a gantlet of recruiters in this manufacturing megalopolis one recent afternoon, Ms. Wang, 25, was in no particular rush to find a job. An underwear company was offering subsidized meals and factory worker fashion shows. The maker of electric heaters promised seven-and-a-half-hour days. “If you’re good, you can work in quality control and won’t have to stand all day,” bragged a woman hawking jobs for a shoe manufacturer.

Ms. Wang flashed an unmistakable look of ennui and popped open an umbrella to shield her fair complexion from the South China sun. “They always make these jobs sound better than they really are,” she said, turning away. “Besides, I don’t do shoes. Can’t stand the smell of glue.”

Assertive, self-possessed workers like Ms. Wang have become a challenge for the industrial titans of the Pearl River Delta that once filled their mammoth workshops with an endless stream of pliant labor from China’s rural belly.

In recent months, as the country’s export-driven juggernaut has been revived and many migrants have found jobs closer to home, the balance of power in places like Zhongshan has shifted, forcing employers to compete for new workers — and to prevent seasoned ones from defecting to sweeter prospects.

The shortage has emboldened workers and inspired a spate of strikes in and around Zhongshan that paralyzed Honda’s Chinese operations last month. The unrest then spread to the northern city of Tianjin, where strikers briefly paralyzed production at a Toyota car plant and a Japanese-owned electronics factory.

Although the walkouts were quelled with higher salaries, factory owners and labor experts said that the strikes have driven home a looming reality that had been predicted by demographers: the supply of workers 16 to 24 years old has peaked and will drop by a third in the next 12 years, thanks to stringent family-planning policies that have sharply reduced China’s population growth.

In Zhongshan, many factories are operating with vacancies of 15 to 20 percent, compelling some bosses to cruise the streets in their BMWs and Mercedeses in a desperate hiring quest during crunch time.

The other new reality, perhaps harder to quantify, is this: young Chinese factory workers, raised in a country with rapidly rising expectations, are less willing to toil for long hours for appallingly low wages like dutiful automatons.

Guo Yuhua, a sociologist at Tsinghua University, said the new cohort of itinerant workers was better educated, Internet-savvy and covetous of the urban niceties they discovered after leaving the farm. “They want a life just like city folk, and they have no interest in going back to being farmers,” said Ms. Guo, who studies China’s 230 million-strong migrant population.

But the more immediate challenge is to the Chinese export machine, which churns out about a third of China’s gross domestic product. Stanley Lau, deputy chairman of the Hong Kong Federation of Industries, whose 3,000 members employ more than three million workers, said he had been advising factory owners to offer better salaries, to treat employees more humanely and to listen to their complaints.

“The young generation thinks differently than their parents, they have been well protected by their families, and they don’t like to ‘chi ku,’ ” Mr. Lau said.

The expression “chi ku,” or eat bitterness, is a time-honored staple of Chinese culture. But for young workers in Zhongshan, it is not the badge of honor that an older generation wore with pride.

In an effort to avoid eating too much bitterness, Zhang Jinfang, a talkative 28-year-old, has cycled through a dozen factory jobs since arriving in Zhongshan after high school. “Sometimes I’ll quit after a few weeks because the work is too hard or too boring,” he said, eating dinner at an outdoor restaurant. “Money is important, but it’s also important to have less pressure in your life.”

Mr. Zhang saves almost nothing of the $260-a-month salary he earns assembling cardboard boxes, another notable shift from the previous generation, which saved voraciously. By Western standards, he works hard — six days a week, sometimes more when orders pile up — and he spends about a fifth of his pay on a rented apartment, having long since fled the bunk beds and curfews of the factory-owned dormitory. His dream: to one day run a factory of his own. “But for now, I’d love to work in an air-conditioned office,” he said.

One factor in the expanding consciousness of migrant laborers is an astounding rise in education, with an additional three million students graduating high school between 2004 and 2008. The result is that a growing number young people are ambitious, optimistic and more aware of their rights, said Lin Yanling, a labor specialist at the China Institute of Industrial Relations. Then there is their fluency with technology — cellphones, e-mail and Internet chat — that connects them to peers in other factories. “When they bump against unfair treatment, they are less afraid to challenge authority,” she said.

With her iridescent fuchsia toenails and caramel-tinted hair, Liang Yali does not exactly fit the stereotype of the “made in China” worker bee. Raised by rice-farming peasants on the island province of Hainan, Ms. Liang, 22, is happily employed at a lock factory, where she packs up the finished product into boxes.

She rents an apartment with two friends, eats out for most meals and spends Saturday night bar-hopping or singing at a local karaoke parlor. At night, before she goes to sleep, she sometimes plays a computer game in which participants steal vegetables from one another’s virtual farm.

Unlike many workers in Zhongshan, Ms. Liang had heard about the strikes, perhaps because the front door to Guangdong Mingmen Lock Industry sits across a muddy canal from where employees of a Honda lock factory held a rare protest last month. She expressed measured sympathy for the strikers, but said she was not interested in following their lead. “My boss is nice and the work isn’t strenuous, so I have no complaints,” she said.

Her friend and co-worker Li Jingling, 27, nodded in agreement, adding that their company sponsored sports activities and allowed employees to dress in street clothes on Saturdays. When the topic turned to her parents, Ms. Li said she felt sorry for them. “They go out to the fields when the sun rises and return home when the sun goes down,” she said. “No matter how difficult their marriage was, they would stick it out. For us, whether a bad marriage or a bad job, we’ll leave it if it’s lousy.”

Back on recruiters’ row, the afternoon sun had thinned the already sparse crowd of job-seekers, leaving a few roughneck kids so undisciplined that not even the sweltering pipe factory was interested in taking them on.

Xiang Qing, a 22-year-old recruiter for the Funilai undergarment factory, was looking wilted and abject under the shade of a plastic canopy. Her factory, which normally employs 2,700 people, was about 700 bodies short. She did her best to sound upbeat, but admitted that it was getting more difficult to find people who are willing to “love the factory and make it their home,” as her brochure suggested.

Ms. Xiang complained that too many young people were unwilling to work hard. “They’re all spoiled and coddled and have no patience,” she said. Then, with the interview over, she returned to her reading material, a woman’s magazine called Beauty.


Xiyun Yang contributed research.

[Viewpoint] Economic sovereignty on sale

Due to the North’s heavy economic dependence on China, the dream of a unified Korea built on a strong market is dying.
July 23, 2010
The JoongAng Ilbo recently reported that North Korea has allowed China access to its East Sea fishing areas. About 250 Chinese boats have been operating in North Korean waters off Rajin and Chongjin.

News of North Korea’s provision of natural resources, such as its mines and logistical infrastructure, including ports and roads, is not new. But the North’s selling of its maritime resources to China is truly heartbreaking.

North Korea is rich in resources, and it wouldn’t be starving if its abundant resources were developed properly. But massive investments are required to build facilities, roads and railroads, as well as to supply electricity.

Yet the North does not have the capital to fund such projects. That’s why North Korea continues selling rights to its resources to China, even though China has not really asked for it.

In the past, the North’s communist leadership used to say that economic subordination meant political subordination, and that an economic colony started with the colonization of resources. Today, however, North Korea has put its economic sovereignty up for sale.

Although there is a path to attracting investments through reform and by opening up the country, the North has decided to sell development rights to its resources because it is less threatening to the regime than to allow other access. While its economy is failing, the regime’s succession plans will require higher political, economic and security costs going forward.

To come up with the funds to maintain its regime for now, the North is being forced to sell everything available. If the situation continues, it is only a matter of time before China has control over the North’s economic sovereignty.

The North Korean people should indisputably have the right to decide how to use their land and maritime resources. But the North Korean leadership is selling the people’s assets without their consent to simply extend the life span of its regime. That is an unpatriotic act of treason, and South Korea is not immune to this tragedy.

While the South is concentrating its attention on the inter-Korean conflict and internal political issues, the North’s economy has worsened so severely that it has had to sell its resources to China just for the purpose of sustaining its regime.

In the past, the South used to argue that the two Koreas must achieve economic integration and political unification. That was not only desirable because of the blood ties between the two Koreas, but because of the hope that the union of the North’s rich natural resources and the South’s technology and capital would make a unified Korea a stronger economic power.

The current situation in North Korea, however, is driving that hope away. As of now, the North’s economy is heavily dependent upon China in terms of trade, investment and aid provision.

In 1990, China comprised 25 percent of trade with the North, but that amount has now grown to about 80 percent these days. This occurred through a process in which China’s importance grew in the shrinking North Korean economy, not because a dying North Korean economy could be saved from poverty.

While China-North Korea economic relations have deepened over the past 20 years, North Korea has been listed as one of the world’s poorest countries. There are two reasons for this. China has failed to provide enough economic assistance to the North for its economy to be restored, and at the same time, it has failed to force North Korea to open up and reform.

For the past two decades, China simply provided enough assistance to maintain some stability in North Korea and create a situation in which the North was forced to provide its natural resources to China. China took advantage of North Korea’s chronic hardships and gained control over its strategic resources. That is against China’s diplomatic policy that it would never fuel a crisis, and it can also be seen as a new form of colonialism.

If the current situation continues, China will likely control North Korea’s rich natural resources even after the two Koreas’ economies are unified. South Korea may need to seek China’s permission to develop resources and build infrastructure for the integrated Korean economy.

We may even need to seek China’s permission to use the North’s rails or sail in its waters. Changing the imbalanced industrial structure of North Korea, which has become totally subordinate to China, may require an astronomical amount of capital. This is an issue that South Korea must contemplate seriously.

*Translation by the JoongAng Daily staff.
The writer is the director of the Center for International Development Cooperation at the Korea Institute for International Economic Policy.


By Cho Myung-chul

Beijing's Empty Bullet Trains
Is China investing way too much in its infrastructure?
By Nouriel Roubini

I recently took two trips to China just as the government launched its 12th Five-Year Plan to rebalance the country's long-term growth model. My visits deepened my view that there is a potentially destabilizing contradiction between China's short- and medium-term economic performance.

China's economy is overheating now, but, over time, its current overinvestment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible—most likely after 2013—China is poised for a sharp slowdown. Instead of focusing on securing a soft landing today, Chinese policymakers should be worrying about the brick wall that economic growth may hit in the second half of the quinquennium.

Despite the rhetoric of the new Five-Year Plan—which, like the previous one, aims to increase the share of consumption in GDP—the path of least resistance is the status quo. The new plan's details reveal continued reliance on investment, including public housing, to support growth, rather than faster currency appreciation, substantial fiscal transfers to households, taxation and/or privatization of state-owned enterprises (SOEs), liberalization of the household registration (hukou) system, or an easing of financial repression.

China has grown for the last few decades on the back of export-led industrialization and a weak currency, which have resulted in high corporate and household savings rates and reliance on net exports and fixed investment (infrastructure, real estate, and industrial capacity for import-competing and export sectors). When net exports collapsed in 2008-09 from 11 percent of GDP to 5 percent, China's leader reacted by further increasing the fixed-investment share of GDP from 42 percent to 47 percent.

Thus, China did not suffer a severe recession—as occurred in Japan, Germany, and elsewhere in emerging Asia in 2009—only because fixed investment exploded. And the fixed-investment share of GDP has increased further in 2010-2011, to almost 50 percent.

The problem, of course, is that no country can be productive enough to reinvest 50 percent of GDP in new capital stock without eventually facing immense overcapacity and a staggering nonperforming loan problem. China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.

Commercial and high-end residential investment has been excessive, automobile capacity has outstripped even the recent surge in sales, and overcapacity in steel, cement, and other manufacturing sectors is increasing further. In the short run, the investment boom will fuel inflation, owing to the highly resource-intensive character of growth. But overcapacity will lead inevitably to serious deflationary pressures, starting with the manufacturing and real-estate sectors.

Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive investment—including East Asia in the 1990s—have ended with a financial crisis and/or a long period of slow growth. To avoid this fate, China needs to save less, reduce fixed investment, cut net exports as a share of GDP, and boost the share of consumption.

The trouble is that the reasons the Chinese save so much and consume so little are structural. It will take two decades of reforms to change the incentive to overinvest.

Traditional explanations for the high savings rate (lack of a social safety net, limited public services, aging of the population, underdevelopment of consumer finance, etc.) are only part of the puzzle. Chinese consumers do not have a greater propensity to save than Chinese in Hong Kong, Singapore, and Taiwan; they all save about 30 percent of disposable income. The big difference is that the share of China's GDP going to the household sector is below 50 percent, leaving little for consumption.

Several Chinese policies have led to a massive transfer of income from politically weak households to politically powerful companies. A weak currency reduces household purchasing power by making imports expensive, thereby protecting import-competing SOEs and boosting exporters' profits.

Low interest rates on deposits and low lending rates for firms and developers mean that the household sector's massive savings receive negative rates of return, while the real cost of borrowing for SOEs is also negative. This creates a powerful incentive to overinvest and implies enormous redistribution from households to SOEs, most of which would be losing money if they had to borrow at market-equilibrium interest rates. Moreover, labor repression has caused wages to grow much more slowly than productivity.

To ease the constraints on household income, China needs more rapid exchange-rate appreciation, liberalization of interest rates, and a much sharper increase in wage growth. More importantly, China needs either to privatize its SOEs, so that their profits become income for households, or to tax their profits at a far higher rate and transfer the fiscal gains to households. Instead, on top of household savings, the savings—or retained earnings—of the corporate sector, mostly SOEs, tie up another 25 percent of GDP.

But boosting the share of income that goes to the household sector could be hugely disruptive, as it could bankrupt a large number of SOEs, export-oriented firms, and provincial governments, all of which are politically powerful. As a result, China will invest even more under the current Five-Year Plan.

Continuing down the investment-led growth path will exacerbate the visible glut of capacity in manufacturing, real estate, and infrastructure, and thus will intensify the coming economic slowdown once further fixed-investment growth becomes impossible. Until the change of political leadership in 2012-13, China's policymakers may be able to maintain high growth rates, but at a very high foreseeable cost.