29 November 2011

In China, Cheating, Lying, & Stealing are Legitimate Business Tools

Chinese efforts to cool down their overheated economy, and deal with some of the extensive damage corruption has inflicted on the banking system, has also caused an economic slowdown. Like the West, China also has a real estate bubble, and property prices are collapsing. But in addition of bad real estate loans, banks have lots of other bad loans that are becoming a major problem. Overall domestic demand is down and export markets have still not recovered from their three year slump. The government has put off dealing with its bank problems, but believes that a dictatorship has all the tools needed to sort out this mess without triggering a major recession. At the moment, the economy is still growing, but each month the forecasts are lowered.

The economic problems are complicated by growing unrest among workers. Strikes are increasing, as are worker demonstrations and riots. China does little to protect workers from bad employers, and workplace deaths and injuries are much higher than in the West. Chinese workers have become aware of this, and want change, they want it now, and a growing number of them are willing to fight for it.

China's corruption is spreading overseas. Not just in terms of bribes paid to businessmen or government officials, but in the way Chinese use the Internet. It's not just the commercial and government sponsored hacking, but the use of fake posts on review and opinion message boards. The Chinese attitude seems to be that, if you are not family, a close friend or business associate (or someone that can arrest you or promptly retaliate), anything goes. Cheating, lying and stealing are all considered legitimate business tools. _StrategyPage
Chinese factory workers across the Pearl River Delta have gone on strike, protesting low wages and limited opportunities, in the midst of an export slowdown. Regrettably, even bra factories have been affected, with the result that even fashion models are being caught without bras.
The strains underline recent warnings of a looming export slowdown from a senior Guangdong official and a survey of country-wide industrial activity in November that showed the worst contraction since 2009.

At Yue Yuen Industrial Holdings' giant shoe factory in Huangjiang town — a major supplier for sports brand New Balance — the mood remained tense after most of its 8,000 workers took to the streets on Thursday, blocking roads, overturning cars and clashing with police.

...Experts and labor advocacy groups warn an external economic slowdown in debt-stricken Europe and countries like the United States could exacerbate the risk of social upheaval in China.

Besides labor disputes, Guangdong province — a crucial locomotive of China's economic growth with a GDP matching Indonesia's — has been roiled in recent months by riots over rural land grabs in Lufeng city, and abuse of power several hours drive west in the city of Zengcheng that saw angry crowds ransack government buildings.

A former deputy editor-in-chief of the official party newspaper, the People's Daily, said the number of “mass incidents” in China, an official euphemism for social disorder, was consistently above 90,000 per year from 2007 to 2009.

...As leaner times provoke aggressive factory cost-cutting and wage trimming, Chinese workers increasingly lashed by persistent inflation are often in no mood to compromise.

In a recent report, consultancy Exclusive Analysis said it sees growing risks of “violent labor unrest” flaring up in Chinese factories and causing property damage and losses, adding: “Real-time use of social media by striking workers and firms' decreased ability to meet workers' demands due to falling Western export demand are likely to drive this violence.”

Europe's economic woes, Chinese manufacturing fragility and flat consumer spending in the United States have all raised the risk that the world is headed for a steep downturn. _ChinaPost
If China is forced to reduce its consumption of commodities due to its economic slowdown, the repercussions on global commodities markets would be significant.

Another interesting development which is likely to reduce Chinese demand for certain global commodities, is the unlocking of the vast Chinese shale oil & gas resource. China is estimated to possess as much as twice the unconventional gas reserves as the United States. If China learns to develop its gas & oil resources -- and particularly if it embraces advanced gas to liquids (GTL) technologies -- the impact on global commodities markets is likely to be significant.

Parts of the above posting were borrowed from an abu al-fin article.

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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