China: Emergency Rate Cuts, Riots, Factory Workers Fired by the Millions
November 27th, 2008Via: Telegraph:
Today, around 500 protesters rioted at the Kai Da toy factory in Dongguan in the Pearl River delta, flipping over a police car and trashing computers in a dispute over payoffs to 80 fired workers. Tens of thousands of factories across the region have already shut their gates.
Yin Weimin, China’s Social Security minister, has revealed that employment is the Communist Party’s number one concern in the downturn and said the “situation is critical”. Unemployment is expected to rise from 4pc to 4.5pc by the end of the year and anecdotal reports have suggested that 3m people have already been fired in the industrial province of Zhejiang alone.
Two major provinces, Shandong and Hubei, have already responded by banning companies from firing staff without permission from the government.
The Chinese government has also announced a £373bn bailout to stimulate domestic growth by investing in infrastructure. However, only a fifth of the money is likely to come from central government coffers, with the rest coming from a mix of private enterprise and local government funds.
“We’re seeing a government that steps in, that is trying to do everything it can to keep growth at a decent rate, and has the financial means and the administrative capacity to make that happen,” said Louis Kuijs, the head of the World Bank’s China economics analysis.
“All my colleagues were shocked by such a big easing. It signals the government may believe the economic situation is really serious for it to call for such a drastic move,” said Liu Dongliang, a currency analyst at China Merchants Bank in Shenzhen.
