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.
