Looks like the finance mavens in Beijing are increasingly optimistic about attempts to bring inflation under control. Encouraged by news that residential property price growth continued to slow in July, the National Reform and Development Commission quietly allowed a price cap on edible cooking oil to lapse. This means bigger margins for vegetable oil producers like Wilmar International, where staff celebrated by throwing everything in the office cooler into the canteen’s deep fryer. Your neighborhood fry-guy, on the other hand, is off to join the irate cabbies, who have taken to the streets of Hangzhou, Beijing and Shanghai to protest increasing fuel costs.
It is already clear to anyone who chats with Chinese cabbies which social class is likely to lead the next violent revolution in China, and the government is taking notice. Sort of. Hangzhou cabbies have been offered a RMB1 fare increase, but this has not proven satisfactory. More significant, perhaps, is a proposal to create a ministry-level institution to better manage the banking system, including both state-owned banks and non-bank financial enterprises like trusts, for example, and that guy with the man-purse full of dollars who hangs around outside Bank of China on Wednesdays. There was also an obligatory swipe at foreigners: State media (quoting an anonymous source) said the central bank was implementing a new policy banning domestic firms from borrowing renminbi from foreign banks. Foreign banks responded with a request that Beijing first send them some renminbi so they can actually reject such loan applications instead of just staring at them blankly. The Hong Kong Monetary Authority followed up by noting that the People’s Bank of China has never actually allowed such borrowing.
Just when Chinese workers were starting to enjoy their newfound higher salaries, factory owners have struck back. Terry Gou of OEM electronics manufacturer Foxconn announced that his company will install 1 million robot workers in the company’s mainland production lines. That’s nearly equal to Foxconn’s present human headcount. Hm. Anyway, the news has gotten Mitsubishi and other robot makers excited about the prospect of China upgrading its workforce. In fact, China’s first domestically produced robot, Xianxingzhe, appears to have gotten a bit too excited.
Presumbably Gou will begin by replacing his upper management with robotic floggers and numerically controlled chastising machines, then perhaps replace himself with a robot programmed to apologize at press conferences. Someday in the far distant future, Foxconn may even replace Chinese line workers, whose wages are expected to start rising 20-30% annually by 2013, with robots. But that would mean massive layoffs in the offing, which would be socially unharmonious.