Sunday, December 07, 2008

Sweet and Sour China?

Last week, The Wall Street Journal published an article on the impact the global financial crisis is having on migrant workers in China. According to the article, migrants in China's urban centers are losing jobs quickly as employers seek to let them go due to the decline in demand for Chinese goods. Many of these workers are returning to their homes in China's rural areas, but this mass migration from the urban to rural areas is having an impact on issues from food security to social unrest.

Migrant workers returning to their farms in the rural areas face issues of food insecurity because they no longer have an income level that allows them to provide for their families. They also face problems resulting from and inability to farm lands either because the lands have been leased to cooperatives, or because migrants do not know how to grow food. Some do not even have the necessary resources to produce enough food to subsist. With a rise in migration from the cities to rural areas, China faces major issues of instability.

Stability in China is a major issue for the Chinese government. As long as the global financial crisis continues, Chinese workers will worry about having jobs. As world demand for cheap Chinese goods falls, China risks continued unrest due to unemployment and migration. As unemployment rises, maintaining stability becomes more difficult. Perry Link, professor of East Asian Studies at Princeton, in an interview for Harper's Magazine in August 2008, notes that "Anger over the growing gap between rich and poor is a fundamental cause of instability in China." As migrants return home, they may become increasingly resentful toward the wealthier middle class.

The individuals currently facing unemployment in China are predominantly the rural poor. The key to stability in China is the satisfaction of the middle class, and as long as the Chinese government can protect the middle class from the unrest and dissatisfaction of the rural poor, it will be able to maintain stability. If not, then China may face a new domestic crisis, which might force China's government to turn toward its own problems and away from its foreign policy emphases. This could have implications for China's actions in Africa.

Ian Taylor's work on China's engagement in Africa in the 1990s suggests that prior to the Tiananmen Square incident in China in 1989, Chinese aid to Africa had declined rapidly through the 1980s as China began to focus more on domestic growth in relation to the United States and Japan. Due to the current financial crisis, African nations could see a repeat of this policy. In the last several years, Chinese aid to Africa has increased dramatically. China's increased need for natural resources, especially oil, has pushed the policy for investment in Africa. China currently supports many autocratic regimes on the continent, and these regimes receive a lot of their financial support from China. If China has to focus on preventing a domestic uprising, it may opt to decrease or even end its emphasis on aid in Africa. China's problems at home could contribute to global instability if the country cannot continue to assist Africa's poor as well.

Western aid to Africa has already seen a decline as Western nations are consumed with preventing complete financial meltdown at home. Should China cease financial aid to Africa as well, there could be serious repercussions as African leaders and nations face a potential shortfall of financial resources. There are perhaps other consequences for Chinese economic decline. Already China is facing a sharp decline in economic growth for at least the next year. Continued decline for one of the most important manufacturing economies could have further implications on escaping the current financial crisis, not just in China, but around the world.

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