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Hot on the heels of the widely-discussed closure of the Hong Kong-listed Dongguan-based toy manufacturer Smart Union comes the news that yet another toy factory — this time a much smaller one — has gone bankrupt. Once again, the local government has come to the rescue, picking up the tab for lost wages that the now jobless employees are demanding to prevent their anger from boiling over. Do we see a pattern for the future?
From AFP:
A TOY factory in southern China has gone bankrupt leaving 900 workers jobless, a report said on Wednesday, just days after a major toy maker went under as a result of the financial crisis.Hong Kong-owned Chong Yik Toy Company, has shut down its factory in Shenzhen, in Guangdong province, the South China Morning Post reported, citing local officials who had paid the workers from emergency funds.
'The workers got payments ranging from a few hundred yuan to nearly 8,000,' Qiu Weiquan, a district labour official, told the Post, adding the local government had paid a total of 3.4 million yuan (S$744, 583) in compensation.
One worker told the paper that he was owed four months' salary.
'I have been so worried about that for a long time. I'm so lucky to have the payout,' he said, according to the Post.
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This is a big problem per The Economist:
http://www.economist.com/business/displaystory.cfm?story_id=12380989
Actually, the problem is much larger than it is being made to seem at the moment and has been going on longer than many suspect.
As little as a week ago, China trade figures indicated a surplus in US$ terms that showed hardly any slowdown.
One Hong Kong economic columnist had the simple, yet ingenious idea of measuring China's surplusses over time in RMB terms. Taking into account exchange rates, China's manufacturing sector has been slowing for months.
Another article I saw just a day later indicated that around 50 percent of the companies in the toy industry have gone under or are expected to go under.
Then.... surprise surprise! Official Chinese figures showed the economy had slowed to 9 percent GDP. It is no secret that GDP figures in China are inflated because cadres at the lower levels want promotions. The government actually chooses figures based on what they think might be correct, but not so low as people would be alarmed. So the GDP numbers are usually between what the cadres are reporting and what the reality is.
--"GDP figures in China are inflated because cadres at the lower levels want promotions"?
sure lower level cadres want promotion but not thru inflating gdp figures, since they cannot.
if you knew a little bit what parts gdp was consist of, you'd not think that way. try read mr. gregory mankiw's book 'essentials of economics' could be a good and easy start for not making that laughable and simple mistake.
Eastman, honey. As I said, the inflation of GDP figures in China and how it is done is not a secret, and has been reported on for years by Chinese and Westerners alike in countless publications... especially around three years ago when China was primarily concerned with economic overheating instead of inflation followed by slow growth. You can't just make something into the "laughable mistake" you wish it were just because you call it one.
As you know quite well, one person can't change GDP, but he CAN change how it is reported. Duh!
taihanasie darling,
when you say 'gdp figures in china are inflated because cadres at the lower levels want promotions', you are not smart enough to know that china central government is tightenning and cooling down the economic development for already one year. do you think a cadre who want to be promoted with his merit will be as laughable as you to INFLATE the gdp figures now instead of to DEFLATE it?
if you still insist on the chance to fake gdp, i have no problem keeping you in dark. but if gregory mankiw's book doesnt help, try 'rich dad poor dad', it's just right one for you and much easier to read.
Compared to the financial holocaust in the US and Europe, toy factory shutdowns are small potatoes. LOL! Yay China, Fcuk the lamb shaslik!
You are, of course, right, BBC. The US is in deep shit right now, and Europe is not far behind. Although I think that everyone is in for a hard time.
China's inefficient factories will have to close. That's what recessions and slowdowns force you to do. Raising productivity is China's main task while the rest of us try to figure out what kind of economy we have left.