Road to riches ends for 20 million Chinese poor

February 20, 2009

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If you thought that the economy was bad here, look at what is happening in China…imagine 2/3 of the population of Canada suddenly unemployed?
– FlashAddict

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By Tomas Etzler and Jaime FlorCruz
CNN

JING SHI, China (CNN) — Tang Hui and his family prospered as migrant workers during China’s economic boom, earning $10,000 a year: enough to build a house, send a cousin to school and pay for his grandmother’s medical bills.

Tang Hui lost his manufacturing job in October just days after getting married.

Tang Hui lost his manufacturing job in October just days after getting married.

But those good days are over. The family’s cash earnings have evaporated, snatched away by a manufacturing crash cascading across China caused by falling global demand for its goods.

The nine people in the Tang family are facing an income of zero; their best hope to survive is to grow rice and raise pigs at home in the Sichuan Mountains.

“Farming is really hard. It needs a lot of hard labor,” says 22-year-old Tang Hui, who lost his manufacturing job four months ago. “None of the young people want to farm nowadays. The income is extremely low.” See photos of the hard-scrabble life of Tang Hui »

A Chinese proverb says: “Going on the road to Sichuan is as hard as going to heaven.” Isolated and mountainous, Sichuan is China’s third most populous province; 60 percent of its 87 million residents are poor and live in the countryside, authorities say.

It became the nation’s biggest source of the 130 million farmers who migrated into Chinese cities, especially in the south, to provide cheap labor for factories that churned out products, mainly for export to the United States. The province was also rocked last May by a massive earthquake that killed tens of thousands of people.

Five years ago, Tang Hui left for southern Guangdong province to work in a factory producing handbags and backpacks. He had to drop out of high school because his family was so poor.

There, he earned enough to stash away savings for his wedding. But last October, just days after he got married, his factory abruptly closed down. It was receiving no more orders from its American clients. Watch Tang Hui walk muddy roads to get home »

“I hope the government can help us during this crisis,” he says. “I hope it won’t be like this for too long. Now, there is not even enough money to celebrate the holidays.”

At least he was able to spend the most important Chinese holiday of the year, the Spring Festival, at home in Qingbadong village.

The road uphill to the village was muddy and slippery. The winter rice fields were brown; the slopes were covered in winter fog. “In two, three months,” Tang Hui says, “everything will be green and blooming.”

And the festive mood — the first time in six years the whole family celebrated the holiday together — was short-lived.

Reality is never far away. Many of the villagers are unemployed. The Tang’s next-door neighbors, a married couple, lost their jobs in a Guangdong shoe factory after working there for 16 years.

“A few months without jobs would be disastrous for us,” Tang Hui frets.

Before they ventured out as migrants, the Tangs lived in a wooden shack. Now, they live in a two-story brick house, with 10 rooms, concrete floors, an open fire pit for cooking. Still, it has no running water and one outdoor latrine.  See where Sichuan province is located »

In the past months, about 70,000 factories nationwide have closed. Beijing official Chen Xiwen estimates about 20 million migrant workers have lost jobs. Tens of thousands of villages in the countryside depend on migrant workers’ income.

China analysts say the spike in unemployment has caught China off guard. “The central government is now telling local governments to provide help and job training, re-employment,” says Wenran Jiang, a political science professor and China expert at Canada’s University of Alberta.

Vice Minister of Commerce Jiang Zengwei says China is offering “a one-off subsidy of 100-150 yuan ($15 to $22) to 74 million low-income people … for temporary relief.” Still, it will take some time before such measures make a difference.  Watch few job hopes for Beijing grads »

Some analysts have suggested that a “rural revolution” is imminent amid the economic turmoil. However, Wenran Jiang says such talk is premature. But he also says the central government must do more in the coming months.

“Many migrant workers have lived a very hard and simple life,” he says. “They have some savings for a rainy day like this, so in the short-term they may be able to cope — but if eight or 12 months later things continue to deteriorate, it could turn volatile.”

Most farmers like the Tangs do not get social security. So villagers who lost factory jobs have few choices except go back to farming. But it is not easy.

Farming feeds people but brings little cash. Millions of the jobless are second-generation migrant workers, young people who grew up in cities.

“It would be very hard,” says Tang Hui. “I have never farmed. I don’t know how to do it.”

To cope, China is creating training programs in the countryside. One of the pilot centers is in Chongqing municipality. Some 30,000 workers have so far taken classes in farming, farming machinery repairs, tailoring and other vocational skills. The trainees got a one-time incentive of about $45.

But the Tangs have never heard about such programs. When asked about the central government’s plan to invest billions of dollars in countryside infrastructure as a part of a huge stimulus package, they expressed anger.

“The central government has good ideas and intentions, but the local officials often ignore them. The road in our village was built by the local government but we had to pay for it. Every family had to pay $100 or more. We get nothing from the government,” says Hui’s father, Tang Zhong Min.

In the evening, the family huddles around an open wood stove. The stove and a small portable electric heater are the only sources of warmth during the cold winter nights. A flickering fluorescent lightbulb barely lights the room.

Tang Hui’s wife, Li Xiaochun, is 21 years old. She used to cut leather in a textile factory, and will soon head back to Guangdong with her husband to search for work.

“I think to be at home is better. I didn’t get used to living outside. I didn’t get used to Guangdong. It is better at home,” she says.

Tang Hui then interrupts. “Of course, I also like it at home, but it is better in other places. Coming home is only good during the Spring Festival,” he says.

Despite the uncertainty, they remain optimistic.

“We are young. There must be some factories still open out there. We should be OK to go out and do something,” Li Xiaochun says.

But Tang Hui’s mother is not so convinced. “Of course I am worried. How can they live without jobs, with no money so far away from home?” asks 46-year-old Hu Xiaoju. “But I will definitely go, too.”

For the Tangs and millions of others in China, the road to Guangdong and employment may prove even more difficult then the proverbial road to Sichuan.

http://www.cnn.com/2009/WORLD/asiapcf/02/20/china.economy.family/index.html


B.C. premier Gordon Campbell to change no-deficit law for budget

February 3, 2009

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Very eloquent speech by Gordon Campbell about the reality of the current financial situation in British Columbia and around the world…
– FlashAddict

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By Stephen Hui
Presenting today’s (February 2) economic update with Finance Minister Colin Hansen, Premier Gordon Campbell found himself trying to explain why his government plans two years of deficits.

While Campbell said he is opposed to deficits, he argued they are necessitated by the “seismic shift in the world’s economies”.

Indeed, the premier hates deficits so much that his Liberal government made them illegal in 2001.

Section 2 (“Prohibition against deficit budgets”) of the Balanced Budget and Ministerial Accountability Act states: “The main estimates for a fiscal year must not contain a forecast of a deficit for that fiscal year.”

So, to make its next two budgets legal, Campbell’s government will have to amend its own legislation.

The B.C. Economic Forecast Council has forecast zero economic growth in 2009 and a 2.8-percent expansion of real GDP in 2010.

Here’s a transcript of Campbell’s remarks on his government’s economic update:

This is a very difficult day.

Colin has laid out the picture.

Over the last few weeks the slides haven’t been getting any better.

I’d like to thank Colin, all our deputies and all the officials in finance for the exceptional work they have done in the last weeks.

As you probably all know the general framework for the budget is normally finalized by mid December. That was not possible this year, if we wanted to present a credible budget document in February.

Everything has been changing. Over the last few weeks we have been forced to confront the most difficult decisions I have ever personally faced in two decades of public life.

I have been pretty clear. I abhor deficits.

But the changes have come too fast and too big for me to honestly tell you we can credibly present a balanced budget on February 17th without doing significant harm to critical health services and essential education services.

I know what I have said. I know the clips and I am sure we will all be reminded of them in the days ahead. I wrestled with this decision for many sleepless nights.

I know I will have supporters who counted on me and on us who will be disappointed, some may be angry.

But I hope they will understand that in these unprecedented times we must ALL take action that reaches beyond ideology to protect the services that are essential in the short term, so we are stronger in the long term.

I don’t believe in deficits. I have consistently railed against them for my two decades in public life.

My colleagues in our caucus dislike deficits as much as me. But we are facing a situation we couldn’t plan for. We haven’t experienced anything like it before in scope, speed, scale, suddenness and synchronicity.

It has been a stark reminder that no one can escape the global forces at play.

There’s been a seismic shift in the world’s economies.

It was just a couple of weeks ago that it became clear, that without massive reductions in planned health and education budgets that a credible balanced budget was not achievable.

I meant it when I said, as I have in so many ways, “when anyone talks about a deficit, they’re talking about turning their back on the next generation and sending our problems forward to them.”

That’s true, especially if you allow deficits to build, year after year, as empty debt, with nothing to show for it.

That is why we worked so hard in B.C. to pay down our operating debt.

Through prudent fiscal management and some very tough decisions, we’ve cut that operating debt by 47 per cent from its peak. We’ve reduced it by $7.4 billion over the last five years. But there’s still another $8.3 billion to go, in addition to whatever gets added back in the next two years.

However, today we face reduced economic growth and a precipitous collapse in projected revenues that has thrown all our earlier budget plans out the window.

Maybe we should have seen it coming.

In December our forecast council was forecasting a 0.6 per cent economic growth for ‘09. By January, that had fallen to zero.

It is very difficult to finalize a credible budget when so many parts are moving so fast. To give you an idea, previously the most dramatic shift the senior finance staff had seen was $100 million in one week. This year they saw a shift of $300 million in one day.

Today the jury’s out on whether our growth will be flat or whether we are already living with the “R” word. However, if we want to build confidence, we have to plan for some bad news and work tirelessly to create some good news.

We are determined to present to the public our best assessment of what we face and how we plan to deal with it.

I meant it in the fall when I said, “We don’t need to run deficits” and that we would not run a deficit in this province. I didn’t think we did or would.

Those comments were made in anticipation of the budget that we were actively planning to deliver on February 17. Since then, our revenue expectations have been repeatedly revised and new expenditure pressures have emerged.

The balanced budget we were planning even in December included a provision for reasonable forecast allowance that would have provided the confidence necessary to make it credible.

And here’s the really hard part. The truth is – we could STILL deliver a balanced budget that would comply with our legislation.

But to do that, we would have to cut hundreds of millions out of planned budget increases for health care and education.

We would have to table a budget with absolutely no margin for error and no room to manage in the event our forecasts are wrong.

It would be a budget that hurts more than it helps while aggravating our current economic predicament. In short, it would be a budget that satisfied the law, but that undermined public confidence and our province’s fiscal credibility.

One of the worst things that ever happened to British Columbia’s reputation was the NDP “fudge-it budgets.”

The only thing worse than a deficit budget is a duplicitous budget. That is why we introduced truth in budgeting legislation and Generally Accepted Accounting Principles. No matter how politically tough it may be to table a deficit budget, the heart of any budget’s credibility is its commitment to telling the truth.

As viscerally challenging as this decision is, I believe people expect their government to be honest and transparent about the challenges at hand – that they don’t want us clinging to ideology or dogma at the expense of the public interest.

This is a tough decision and people will judge us for it.

We will be recalling the Legislature on noon Monday, February 9, a day earlier than planned.

We will take that full week, and through that weekend if necessary, to debate the legislative changes necessary to ensure that the budget we table is legally compliant.

Those amendments will effectively suspend the current balanced budget requirement for the next two years.

They will require the budget to be balanced in 2011/12 and thereafter.

They will also require that every penny of future operating surplus is first applied to eliminating the direct operating debt.

The Speech from the Throne will be delivered on Monday, February 16, and the budget will be presented as legally required, the next day.

It will be a budget that protects and increases funding for health and education, consistent with the 2008 budget.

It will be a budget that includes immediate, time-limited investments to support job creation and to help build confidence in these turbulent times.

And I hope everyone hears this: it will NOT be a budget that abandons our obligations to future generations.

Just because we have been forced to present a deficit budget that may be unavoidable for the next two years, does not mean that we will not also manage down spending during that time.

On the contrary, we WILL.

You will see significant reductions in every area of discretionary spending – in travel, advertising, administration, service contracts, grants and contributions and some government programs.

In short, discretionary spending will be kept to a minimum.

A new restrictive spending regime will be put in place. We will do everything we can to protect core services.

We have created a fund out of savings to mitigate impacts on individuals and to make smart decisions to ensure we have critical staff available for key programs. We have also made a purposeful effort to ensure that it is not just the lower ranks of staff that manage through change. The senior executive ranks will be reduced by 20 per cent to contribute to this overall belt-tightening.

This will be the toughest budget we have ever faced.

There is far less room for cost savings in our budgets today than there was seven years ago.

British Columbians have been fantastic in helping us to manage those pressures in their interests.

We will not return to the days of runaway spending, high taxes and endless deficits.

We will not abandon our abiding commitment to fiscal discipline.

This is not about changing priorities. It’s about protecting them.

We will demonstrate the depth of that conviction.

To the extent there is new stimulus spending, it will be focused and limited to the next two or three years.

Every effort will be made to minimize the structural deficit.

That will be evident on February 17.

I regret that we are faced today with this situation.

But I want to assure everyone that we will not only get through this difficult period; we will emerge stronger than ever.

The relative strength of our economy and our strong fiscal position will allow us to do just that.

There is no place better positioned to successfully get through this than British Columbia.

We will use this period to embark on a building program for our province that will create jobs in every region of the province.

We will lay that out in more detail in the days ahead.

Tough as it is today for so many, our fastest route forward is to build stability and confidence in our future. That is what our budget will be all about.

http://www.straight.com/article-199550/bc-premier-gordon-campbell-change-nodeficit-law-budget