Wednesday, 3 August 2016

China Economy - Fact Sheet

  • In 1978, Deng Xiaoping begins China’s opening up reforms leading to rapid economic growth.
  • In 1978 China per capital income was $155 where as in 2014 it is $7,590.
  • 300 million people have moved from rural areas to cities in the last 30 years, and the same is predicted for the next 30 years.
  • Lifted 800 million people out of poverty – an unparalleled achievement. 
  • In urban centers in China, poverty has been virtually eliminated.
  • China’s development has been driven by the coastal east.
  • Half of the world’s concrete and a third of the world’s steel is used annually in China.
  • China's development in the rural west is lagging behind. Its per capita income is still below the world average.
  • China's growth strategy was to assemble and sell cheap goods to the world.
  • The total value of world income is closing is $70 trillion per year, and there are seven billion people in the world, so the average income is heading towards $10,000 per person per year. (Mar 29, 2012)
  • No other country has averaged a growth rate more than 9 percent over a 25-year period. Consistently high growth rates are an anomaly limited to a handful of economies in East Asia.
  • Today China has become “The Factory of the World”.
  • China has contributed to 67% of the total reduction of global poverty during the last 25 years.
  • One Child policy, the policy has allowed China to reach goals of significant importance to its population, such as economic growth and stability. Despite appearing absurd and morally questionable to the outside world, the fact that is important is that it works for China.
In China, all development is precarious and is at the expense of exploitation of workers without any limits not only for the prosperity of China but the whole world. While the world enjoys cheap goods produced by Chinese workers, he works and lives in most inhuman conditions.
  • China has been an attractive destination for global corporations due to its low wage rates and labor laws that disallow independent trade unions and limit the right to strike. But China does not yet meet international labor law standards.
  • Most workers in China’s factories, mines, mills, warehouses, docks and transport hubs still have little or no say in selecting their union representatives, and no means, short of stopping work, to bring recalcitrant employers into direct negotiations over industrial grievances. 
  • No freedom for Chinese workers to exercise their basic human rights.  
  • The wages of Chinese workers have been suppressed due to the lack of freedom of association. Wages would be higher and rising faster if the Chinese government secured the fundamental freedoms of association and collective bargaining for its citizens.
  • In Pegatron, iPhone manufacturer in China, workers earn about $1.85 per hour and pull significant overtime hours to make enough money to cover living expenses. The standard shift was nine hours a day, but that starting in September staff worked an additional minimum of 20 hours of overtime each week, usually split between an extra two hours each weekday and one 10-hour shift on Saturdays totaling 65 hours weekly. With overtime accounted for, the factory's workers earn about $753 in monthly wages.
  • Even though Apple is publicly committed to good employment practice and its supplier code of conduct demands that employees in its supply chain are treated with respect and dignity. But in reality illegally long hours and draconian rules for a very small daily wage. Many Foxconn workers manage to go home only once a year.
  • Up to 24 people can share one room and the rules are strict, even prohibiting the use of a kettle or a hairdryer. 
  • Anything between 60 and 80 hours of overtime a month was normal. One worker produced a payslip showing 98 hours of extra time in a single month – nearly three times the legal maximum (of 36 hours in a month) and in breach of Apple's own code of conduct. The rule that employees should have one day off in seven is often flouted.
  • During work, some employees claimed they were forbidden to speak to each other and some were forced to stand for hours without a break. Foxconn, a Fortune 500 company, does not deny it breaks the overtime laws, but claims that all overtime is voluntary.
  • A typical working day means getting up at 6.30am, catching a bus for the 30-minute ride to the factory at 7.10am and attending a compulsory – but unpaid – assembly at 8.10am, before starting work at 8.30am. Shifts, including overtime and breaks, end at 8.30pm. Night shifts follow a similar pattern.
  • Demand for the first iPad was so intense that workers claim they had to put in a seven-day week during peak production period. "We only had a rest day every 13 days," claimed one "And there was no overtime premium for weekends". 
  • They don't have a social life any more. Their life is just working in a factory and that is it.
  • In 2010, the most infamous incident of exploitation of workers happened in one of those Foxconn factories, where 18 workers attempted to commit suicide and 14 of them succeeded.
  • Despite evident and blatant worker exploitation, there is no legal battle against Foxconn. No one has successfully filed a lawsuit against Foxconn due to flaws in the law and its ineffective enforcement.
  • In the HP production unit in Foxconn must complete an action within 3 seconds, standing on the same spot for 10 consecutive hours per day. They were granted with only 10 minutes for a break in the middle of the day for drinking water and visiting restroom.
  • Overtime hours in excess of 100 hours was common, and some were even in excess of 200 hours. In 87% of the factories, one day of rest was not guaranteed and daily overtime work exceeding 3 hours was a norm.
  • The exploitation of workers is so stunningly pervasive that it virtually happens at ever corner. The firms exploit the workers blatantly, with no fear of being prosecuted.

My View:
Development is defined as simultaneous upliftment of all classes of society. The "Trickle-down theory" which emphasizes that money appropriated for the top would trickle down to the needy is only to characterize economic policies favoring the wealthy or privileged and is unacceptable non-sense. The day is not too far when Chinese workers will get fed up with the exploitation and start ascertaining their rights and rightful share of the cake and then Chinese model of economic development built around "worker exploitation" will crumble like pack of cards. With them companies/economies built around cheap Chinese work force will also crumble. 

In his last interview JRD Tata said "I don't want India to become a super power or super economy. I want India to be a happy nation."

Therefore it makes sense to build our economy, robustly, with fulfilling our national needs as the highest priority rather than chasing the fragile & fluctuating world supply demand chain with ample scope for corruption, laundering, manipulations and mismanagement etc.

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