China: Long march to market

Reports from China suggest that in February, the People’s Liberation Army had to be called in to end demonstrations against redundancy by twenty thousand miners. The rural enterprise revolution, central to China’s economic strides in the quarter-century since Mao, is now challenging employment security in old industrial heartlands.

The World Today
6 minute READ

Alan Shipman

Independent economist and the author of The Market Revolution and its Limits - Routledge, 1999

As state-owned heavy industries fight state-sponsored startups for a share of a slower-growing market, the pressure to streamline is producing unacceptable inequality and unemployment fears. The spectre of re-running Russia’s deindustrialisation, without its natural-resource cushion, haunts Beijing and the regions most at risk.

As china enters the third decade of its long march to the market, its economic reforms have reached their most dangerous phase. Jobs continue to shift from farms to rural industry, raising productivity in both. But this can no longer deliver the double-digit growth of the Deng Xiaoping years.

To sustain modernisation at the pace that global competition demands, employment must transfer to ‘sunrise’ activities in the old industrial regions. State-owned enterprises (SOEs) are already feeling the heat of increased domestic competition.

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