Who would swap places with a Guangdong factory worker? A fair number of China’s rural population might still be keen, but job security in the sector is far from encouraging. It’s a safe assumption that factory workers account for many of the 10.2 million people laid off in the first 10 months of 2008, 2% more than the government’s full-year projection. The Guangdong government has responded with a rescue package worth more than US$5.8 billion. This includes subsidies for small and medium-sized enterprises, tax rebates, and incentives for factories to shift to cheaper inland locations.
The link between struggling exports and rising – or perhaps just more widely reported – instances of social unrest nationwide may still be a tenuous one. However, the trends are clear to see (in our recent briefings, if nothing else). There was more fallout from protests that turned violent earlier in the week in Gansu province and there has since been another demonstration in Beijing concerning public losses from an illegal fund-raising scheme.
Although occupied by pressing macroeconomic issues, the government continues to govern. The National Development and Reform Commission (NDRC) is considering revisions to the fuel pricing system and has also announced plans to overhaul the scandal-plagued dairy industry. In these difficult times, perhaps the guys at the NDRC are keen to show they are earning their crust. However, there is no need for time-consuming new strategies over at the State Administration of Foreign Exchange, economists say: investments in US Treasury bonds remain the best option for China’s forex reserves.