China Coal Miner Dispute Shows Challenges Facing Xi's Reforms

  • Heilongjiang government says workers at Longmay not being paid
  • Provincial governor claimed earlier salaries were being paid

The Heilongjiang provincial government in northeast China said Longmay Mining Group has delayed salary payments to workers, reversing earlier claims by the region’s governor who said its miners are being paid on time and held up the company as an example of reform.

Longmay is facing severe losses and is running out of money to pay workers, the Heilongjiang government said in a statement on its website March 12. “We will learn the lesson of reporting incorrect information,” it said.

The statement came as workers at a Longmay unit took to the streets to protest Governor Lu Hao’s comments, according to the official local newspaper Shuangyashan Daily. The agitation underscores how President Xi Jinping’s campaign to cut industrial overcapacity and lay off 1.8 million workers in coal and steel sectors is facing resistance.

Lu said on March 6 that Longmay is a good example of progress in restructuring large state-owned firms and salaries to underground miners are being paid on time.

“The governor made the local government look bad,” Lin Boqiang, director at the China Center for Energy Economics Research at Xiamen University, said by phone. “The big challenge ahead is how to reallocate these employees who are about to lose their jobs."

About 1.3 million coal workers and 500,000 in steel industry will be cut, Yin Weimin, human resources and social security minister, said last month. The government has set up a 100 billion yuan ($15.4 billion) fund to be spent over two years to help companies resettle workers. The country aims to eliminate as much as 500 million metric tons of coal and 150 million tons of steel production capacity by 2020.

Longmay planned to cut 100,000 jobs by last December, representing more than 40 percent of its workforce, the state-run China Daily reported last year.

— With assistance by Jing Yang

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