{"id":12282,"date":"2016-03-25T23:57:08","date_gmt":"2016-03-25T15:57:08","guid":{"rendered":"http:\/\/chinaworker.info\/?p=12282"},"modified":"2016-03-30T23:53:34","modified_gmt":"2016-03-30T15:53:34","slug":"china-massive-job-destruction-has-already-begun","status":"publish","type":"post","link":"https:\/\/chinaworker.info\/en\/2016\/03\/25\/12282\/","title":{"rendered":"China: Massive job destruction has already begun"},"content":{"rendered":"

China\u2019s rulers are destroying ten times as many coal mining jobs as Britain\u2019s \u2018Iron Lady\u2019 Mrs Thatcher<\/strong><\/p>\n

chinaworker.info reporters<\/p>\n

A tsunami of job destruction is heading towards heavy industry in China. This is especially in the coal and steel sectors which suffer from a flooded market and falling prices. Coal prices have fallen by 50 percent since 2012, pulled down by the slump in China\u2019s housing construction which was the main driver of global demand. Coal and steel output in China have both fallen by 6 percent in the first two months of 2016, a faster\u00a0rate of contraction\u00a0than in\u00a0the past two years.<\/p>\n

The wave of job cutbacks \u2013 part of Xi Jinping\u2019s \u2018supply-side reforms\u2019 \u2013 is the most important policy signal to come from the National People\u2019s Congress (NPC) in March. \u201cChina just announced one of the largest single layoffs in history,\u201d ran a headline on business website Quartz.<\/p>\n

Premier Li Keqiang left no doubt on this score when he said during his live televised press conference at the end of the NPC: \u201cWe\u2019ve already chosen steel and coal as the two sectors for achieving initial breakthroughs in reducing production capacity.\u201d Li was speaking just days after a huge strike by coal miners in Shuangyashan, Heilongjiang province, which the premier and other officials of course\u00a0never mentioned. Li ignored a journalist who shouted out an unscripted question about what would happen to workers who lose their jobs.<\/p>\n

While the CCP (so-called Communist Party)\u00a0dictatorship\u00a0is being coy about the scale of the coming redundancies, a widely cited Reuters report based on\u00a0anonymous government sources says 5-6 million job cuts are planned over the next three to four years. This will shrink the state sector workforce to 31 million from 37 million workers in 2013 \u2013 a 17 percent reduction. Of these, 1.3 million jobs will be axed in coal production and 500,000 in steel. There are fears that these cuts could just be the tip of the iceberg.<\/p>\n

\"A
A steel mill in Anhui province.<\/figcaption><\/figure>\n

2.2 million coal jobs\u00a0to be axed<\/strong><\/p>\n

For the workers in industrial regions like China\u2019s northeast the hard landing has already arrived. \u201cThe pain is spreading among workers, companies and local governments nationwide,\u201d noted Caixin magazine, which is an enthusiastic supporter of the job cuts and the CCP\u2019s supply-side economics.<\/p>\n

The \u2018Iron Lady\u2019 Margaret Thatcher declared war on the British mineworkers in the 1980s. Under her viciously anti-working class rule and that of her successor, John Major, over 190,000 jobs were eliminated in the country\u2019s coal sector. But in China\u2019s case, ten times as many coal industry workers will lose their jobs. And rather than decades\u00a0this is planned within the space of a few years.\u00a0Official data shows that 890,000 coal jobs have already been lost in China since the end of 2012, which together with the 1.3 million recently announced by Yin Weimin, the Minister of Human Resources and Social Security, brings the total job reduction in the coal sector to around 2.2 million.<\/p>\n

To offer another comparison, the great downsizing of the US steel industry in the 1980s and \u201890s saw the number of jobs fall from 450,000 to just 150,000 workers. This is dwarfed by Beijing\u2019s plans to eliminate 500,000 steel job in the next three to four years.<\/p>\n

Workers are fighting back<\/strong><\/p>\n

The strike by coal miners in Heilongjiang during the annual NPC session is one of most important developments since Xi Jinping came to power. The workers\u2019 determined struggle forced the provincial officials to make funds available to crisis company Longmay Group for it to begin paying the workers\u2019 unpaid salaries. Unfortunately, without further mass pressure and organised struggle to\u00a0change how the economic system is run, the Longmay workers and millions of others will inevitably be cheated again in the months and years ahead.<\/p>\n

At the same time as the Longmay workers in Shuangyashan took their protests to the streets there were strikes by steel and coal industry workers in Jilin and Shanxi. The situation in provinces and regions that depend on heavy industry is becoming explosive. Workers from Shuangyashan who spoke to chinaworker.info<\/strong> say many families are going hungry because they cannot afford to buy food.<\/p>\n

Longmay Group, owned by the Heilongjiang provincial government, is the biggest coal company in northeast China. Its workforce of 250,000 is greater than the entire coal mining workforce of the 28-country European Union. Last September\u00a0Longmay\u00a0announced that 100,000 jobs would go because it is saddled with big\u00a0debts and a shrinking market.<\/p>\n

Longmay faces pressure to repay the interest on its loans and has prioritised these payments\u00a0at the expense of paying wages to its workforce, many of whom are at\u00a0semi-closed pits or pits working only at half-speed.<\/p>\n

This process shows the same dynamic as in other countries where the banks, which were a major cause of the great economic meltdown and recession of 2008, are at the front of the queue to demand their \u2018pound of flesh\u2019 in the form of\u00a0government bailouts. Many of the world\u2019s biggest banks have been saved from collapse with vast sums of public money while ordinary workers have suffered falling incomes, unemployment, cuts in pensions and other harsh forms of austerity.<\/p>\n

READ: Mineworkers\u2019 protests\u00a0shake China\u2019s leaders<\/a><\/p>\n

Bailouts for banks, austerity for the masses<\/strong><\/p>\n

A\u00a0shocking\u00a0example is Greece, where the government has been\u00a0forced to pay billions of dollars in interest repayments to German and French banks. Under the pressure of the banks and international agencies such as the IMF and EU the Greek government has been\u00a0stealing this money from the working class, public sector employees and pensioners.<\/p>\n

In China there is no IMF bearing directly down on the government or upon indebted companies like Longmay, but the CCP regime follows the same market logic and imposes its own austerity demands\u00a0on provinces like Heilongjiang. The relationship is quite similar to Greece\u00a0\u2013 with Beijing and the\u00a0Finance Ministry playing the role of the IMF\/EU loan sharks.<\/p>\n

Socialists completely reject such\u00a0economic arguments. We say the debts\u00a0should be written off. These debts were created\u00a0by the\u00a0wasteful, greedy, and unrealistic schemes\u00a0of unelected officials and company directors\u00a0spurred on by the central CCP leaders with\u00a0their fixation on GDP growth at all costs.\u00a0Workers should not be made to pay for this\u00a0crisis. We demand that the banks, whose reckless lending and profit greed encouraged companies like Longmay to\u00a0dig themselves into debt, should be placed under the democratic control of the working class. Their financial accounts and the accounts of any company that threatens to cut jobs should be opened to public inspection by the working class to see how the money has been spent.<\/p>\n

The directors,\u00a0financiers and government officials responsible for creating this mess should be dismissed and punished. They should be replaced not by more profiteers and corrupt officials but by a democratic workers\u2019 administration elected from below. The workers\u2019 protests should raise the key demand of no layoffs \u2013 work or full pay! If democratic planning\u00a0is adopted to replace the \u2018market\u2019\u00a0fundamentalism\u00a0of Xi Jinping and the CCP regime, every job could be secured as part of a\u00a0total\u00a0industrial re-organisation to develop potentially huge\u00a0new sectors in renewable\u00a0energy and refitting the economy on a carbon-free and anti-pollution basis.<\/p>\n

This would entail cleaning up the 70 percent of China\u2019s rivers and waterways which are now toxic, and re-fitting millions of homes and cities with modern energy-efficient central heating systems powered by renewable\u00a0energy, to cite just two examples. This could create millions of new jobs. But such a vast economic transition is beyond the scope of a market-based model. It\u00a0could only be realised as part of a democratic socialist plan, which in turn would require a revolutionary challenge to\u00a0the power of the billionaire vested interests that the CCP regime protects.<\/p>\n

\"Strikers
Strikers in Shuangyashan blocked the railway on 11 March 2016.<\/figcaption><\/figure>\n

Resettlement fund<\/strong><\/p>\n

The government promises a resettlement fund to compensate dismissed workers. They talk about retraining and \u2018alternative growth engines\u2019 as well as a \u2018gradual\u2019 approach based on merging and consolidating existing coal and steel companies. But how much trust can be placed in such vague statements?<\/p>\n

Longmay Group was itself formed by merging four state-owned companies in 2004\u00a0\u2013 clearly\u00a0this has\u00a0not saved jobs! The main economic \u2018solution\u2019 put forward by\u00a0the government is increased consumer spending, but this is nowhere on the horizon. How can consumer-driven economies take root in regions like Heilongjiang with mass unemployment and hundreds of thousands not receiving their wages or pensions?<\/p>\n

Already officials from different provinces are fighting over who will get a piece of Li Keqiang\u2019s resettlement fund. Speaking at the NPC, Gao Hongzhi, the CCP chief of Handan in Hebei province, urged Beijing not to \u201cspread the pepper\u201d and instead to concentrate the special fund\u00a0on… Hebei province!<\/p>\n

At just 100 billion yuan the proposed fund is too small.\u00a0Divided among the 1.8 million coal and steel\u00a0workers already targeted for layoff, 100 billion yuan would only cover around 11 months\u2019 salary. Conservative estimates say that ten times this amount \u2013 1 trillion yuan \u2013 has been spent to rescue the stock market (not very successfully). This shows the regime\u2019s skewed priorities.<\/p>\n

What kind of \u2018alternative\u2019 jobs will be offered to laid-off coal and steel workers? If any jobs are offered this will be in low paying branches such as restaurants, transportation and retail. The \u2018hi tech\u2019 and \u2018innovation\u2019 sectors that the CCP leaders like to focus on in\u00a0their speeches are only developing in small pockets around the country. But there is no guarantee that even the former will be available\u00a0for laid off workers. \u201cThey haven\u2019t told us anything about plans for other jobs,\u201d complained a worker from Longmay\u2019s coal mine in Jundeshan. \u201cIf just one official came to us to say something, that would be good, but there hasn\u2019t been any word.\u201d<\/p>\n

READ: Twin meetings, mass layoffs and failed reforms<\/a><\/p>\n

What is supply-side economics?<\/strong><\/p>\n

The government has rebranded its economic reforms with the slogan \u2018supply-side economics\u2019. This slogan is inspired by the policies in the 1980s of Mrs Thatcher in Britain and her ideological ally President Reagan in the US. Both had a mission to increase the profits of the capitalists by attacking the working class and \u201ctaking a\u00a0knife\u201d to the public sector \u2013 a term that Li Keqiang also\u00a0likes to use.<\/p>\n

Privatisation, reducing\u00a0government regulation, increased unemployment, tax cuts for big companies \u2013 these were the hallmarks of supply-side economics in the West. China\u2019s leaders may\u00a0not follow the same policies in every detail. Thatcher and Reagan attacked and shackled the trade unions, but in China this job is already done: independent unions in which the members decide matters through democratic votes are banned in China.<\/p>\n

Within\u00a0the CCP elite\u00a0there is an admiration for Thatcher and Reagan as uncompromising \u2018reformers\u2019 who did not step back or soften in pursuing painful economic restructuring. Jia Kang, an economist in the Ministry of Finance, spelt this out in comments made to the New York Times (3 March 2016): \u201cThatcher and Reagan are highly regarded because it was proven that they made the right choices under heavy pressure. Their spirit was one of boldly taking on challenges and innovating, and that\u2019s certainly worth Chinese people emulating.\u201d<\/p>\n

In the past year especially, the\u00a0CCP regime has\u00a0imprisoned many dissidents for allegedly harbouring \u201cWestern values\u201d. Yet there is no bigger fan club for\u00a0the \u201cWestern values\u201d of the Thatcherite and Reaganite economists than the Ministry of Finance in Beijing. Among workers and youth in Britain and America, Thatcher and Reagan\u00a0are widely hated. The results of their policies were to make the rich richer and the poor poorer \u2013 a model that has been copied all around the world in the decades since.<\/p>\n

Regions devastated \u2013 still to this day<\/strong><\/p>\n

Many of the towns and regions in Western countries that were devastated by supply-side economics and the mass closure of heavy industry in the 1980s and \u201890s are still suffering from the economic and social effects.<\/p>\n

\u201cEven developed countries are having trouble increasing service sector jobs in regions that lost mining and manufacturing jobs 20 to 30 years ago,\u201d says East Asian economic expert Ramon Pacheco Pardo from King\u2019s College London.<\/p>\n

These policies have in some cases led to a strong regional or national consciousness developing against central governments that are blamed for\u00a0the destruction of local economies. This is the case in Scotland, which two years ago came very close to voting for independence from Britain. Similar moods have developed in Eastern Germany and Catalonia in Spain. China could be affected in similar ways as its economic crisis continues, with an upsurge in demands for local autonomy or even independence.<\/p>\n

As we have warned on chinaworker.info<\/strong> the capitalist reform policies of Xi Jinping and the CCP leadership represent a road to disaster. If fully implemented these policies could result in an economic slump\u00a0\u2013 a hard landing \u2013 with the collapse of many industries and companies and not only the so-called \u2018zombie\u2019 companies.<\/p>\n

This is already happening in regions like the northeast but it is also true of other regions. Speaking about the Pearl River Delta in Guangdong\u00a0\u2013\u00a0known as \u2018the world\u2019s factory\u2019\u00a0\u2013\u00a0a top economist at HSBC, John Zhu, warned: \u201cWhat\u2019s happening now is you are reaching a stage where even healthy industries, or companies that would normally be profitable, are running into stress. It\u2019s actually quite an urgent situation\u2026\u201d (Globe and Mail, Canada, 2 February 2016).<\/p>\n

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