Friday 3 October 2008

Young Chinese in Shenzhen Rethink US-Style Capitalism

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Young Chinese in Shenzhen Rethink US-Style Capitalism

US economic crisis has resulted in closed factories and lost jobs in Shenzhen

By ARIANA EUNJUNG CHA
2 October 2008

THE gray waters around the port of Yantian are ominously empty. It’s supposed to be peak season here, a time when the docks are filled with exporters shovelling holiday goods onto freighters bound for the United States.

Instead, irritated truck drivers, logistics coordinators and other workers stand idle, smoking and complaining that business is so slow that their income has dropped by two-thirds, because of the deteriorating US economy, with which this region is so closely linked.

The community that once bragged about its close ties to the United States now haunts them.

Li Hongguo, 36, who was ferrying a load of handbags from a factory to the port, said that last year he made one or two runs a day. These days he’s lucky to get one job every three to four days. ‘America is the boss of the world, so if it does badly, it affects everyone else,’ Li said.

Nowhere is this view more pervasive than here in China’s Pearl River delta, where the majority of companies exist with the single goal of producing products for US consumers.

Stakeholders in China are watching the trials and tribulations of the massive US economic rescue package, rejected on Monday by the House of Representatives, as closely as Americans are.

For better or for worse, economists say, China and the United States are like conjoined twins. ‘The two economies are mutually reliant and mutually influential,’ explained Hua Min, director of Fudan University’s Institute of World Economy in Shanghai.

Once the envy of the nation for its abundant jobs and high wages, Shenzhen - the birthplace of China’s experiment in capitalism - is experiencing an economic downturn in tandem with the United States.

Industry groups estimate that tens of thousands of factories making products from ball bearings to shoes to furniture have closed over the past year. Weighed down by the problems here, growth in China’s gross domestic product for 2008 is expected to slow to a single digit for the first time in 11 years.

On a recent weekday at Yantian, the majestic, nearly 1,300-foot-long container ships that once graced the waters were gone.

With shipping volume down for the first time in the port’s history - by 5 to 7 per cent depending on the month - the larger ships had been reassigned to other ports in China with goods headed for anyplace but the United States. Only half-size freighters are left to serve Yantian’s port.

‘Orders to the US have been reduced by 40 per cent,’ said Angela Hao, general manager for the Shenzhen office of the City Ocean shipping company. ‘At the moment everybody is struggling, trying to see who will survive.’

Sun Junshan, who works in sales for Shenzhen Jiao Technology, said that when she was growing up she thought America was ‘heavenly - everyone is living well and there are good benefits for Social Security and medical care’.

‘Now I feel like China is number one, not the US, because China has money,’ Sun said.

The US economic problems have shaken the foundation of what many Chinese have been taught in the 30 years of Communist leader Deng Xiaoping’s ‘reform and opening up’ campaign, which was built around the idea, as Deng famously said, that ‘to get rich is glorious’. The US system that was once held up as a model now seems full of weaknesses.

China’s leaders say their country can still learn from the United States - from its mistakes, that is.

Ever since Shenzhen, just north of Hong Kong, was honoured with becoming the country’s first special economic zone in 1979, residents of the area have been China’s keepers of the American dream. Today the landscape around the city, with its big houses and big cars, is the closest thing China has to US-style suburbs.

Xiong Ming, 28, who works at a shipping company focused on the port of Yantian, is part of a generation that grew up with the gospel of American capitalism. When he graduated from college six years ago with an economics degree, Xiong took a marketing job with Cosco, China’s premier shipping company. With his strong English skills, he did so well that he earned a management position at a competitor that sent goods to California’s ports in Long Beach and Oakland.

For a while, Xiong prospered. Like other employees, he often made US$4,400 to US$5,800 a month with commissions - a fortune in a country where the average annual urban salary is US$2,000.

But today most workers are making US$750 to US$1,500.

If the US economy doesn’t pick up, his current employer will probably have to lay off some of its 20 employees in Shenzhen or even shut down. ‘Right now we haven’t hit bottom yet. We see things getting worse and worse,’ he said.

Xiong, a marketing manager at Dragontrade Logistics, said that if he were to do it all over again, he would choose to work more with Europe, or emerging economies in areas such as the Middle East, or even with Chinese companies that he once thought were old-fashioned.

The US troubles have made him reconsider the benefits of communist, state-run support, he said.

‘In the US, the workers at the gold-chip companies are carrying out their desks in boxes,’ Xiong said. ‘But in China, the jobs are still here because they are more protected.’ - LAT-WP

Researchers Crissie Ding and Wu Meng contributed to this report